DEBATERS'  HANDBOOK  SERIES 


RECIPROCITY 


DEBATERS' 
HANDBOOK  SERIES 


Enlargement  of  the  United  States  Navy 
(3d  ed.  rev.  and  enl.) 

Direct  Primaries    (3d  ed.  rev.  and  enl.) 

Capital  Punishment 

Commission  Plan  of  Municipal  Govern- 
ment (3d  ed.  rev.  and  enl.) 

Election  of  United  States  Senators  (2ded. 
rev.) 

Income  Tax    (2d  ed.  rev.  and  enl. ) 

Initiative  and  Referendum  (2d  ed.  rev. 
and  enl.) 

Central  Bank  of  the  United  States 

Woman  Suffrage    (2d  ed.  rev.) 

Municipal  Ownership 

Child  Labor 

Open  versus  Closed  Shop     (2d  ed.) 

Employment  of  Women 

Federal  Control  of  Interstate  Corporations 

Parcels  Post 

Compulsory  Arbitration  of  Industrial  Dis- 
putes 

Compulsory  Insurance 

Conservation  of  Natural  Resources 

Free  Trade  vs.  Protection 

Government  Ownership  of  Railroads 

Reciprocity 

Trade  Unions 

Other  titles  in  preparation 


Each  volume,  one  dollar  net 


Debaters'    Handbook    Series 


SELECTED  ARTICLES 


ON 


RECIPROCITY 


COMPILED  BY 

EDWIN  CLYDE  ROBBINS 


MINNEAPOLIS 
THE  H.  W.  WILSON  COMPANY 

1913 


CONTENTS 

BRIEF 

Introduction     . ix 

Affirmative     ix 

Negative xii 

BIBLIOGRAPHY 

General    Bibliographies    xv 

General    References    xv 

Affirmative   References    xviii 

Negative    References    xix 

Special  Bibliographies  on   Important  Topics   xxi 

GENERAL    DISCUSSION 

Lau^hlin    £   Willis.    Reciprocity    I 

Hornbeck,  Stanley  Kuhl.  Most  Favored  Nation  Clause 

in  Commercial  Treaties.  Chapter  III 

Bulletin,  University  of  Wis- 
consin. (Economics  and  Political  Science  Series.)  26 

Hornbeck,  Stanley  Kuhl.  Most  Favored  Nation  Clause 

in  Commercial  Treaties.  Chapter  IV 

Bulletin,  University  of  Wis- 
consin. (Economics  and  Political  Science  Series.)  32 

Reciprocity  and  the  Philippine  Islands 

Manila  Merchants'  Association  41 

Haynes,  F.  E.  Reciprocity  Treaty  with  Canada  of  1854. 

American  Economic  Association  Publications  56 

Bliss,  William  D.  P.  ed.  Reciprocity  Treaties  and  Agree- 
ments Since  1850. ...  Encyclopedia  of  Social  Reform  95 

AFFIRMATIVE  DISCUSSION 

United  States  and  Canada Current  Literature      97 

(  liarlton,  J.    American  and  Canadian  Trade  .Relations. 

Forum     100 


viii  CONTENTS 

Charlton,  J.  Reciprocity  With  Canada Forum  112 

Willis,  H.  P.  International  Aspects  of  Reciprocity 

Journal  of  Political  Economy  127 

America,  Canada  and  Great  Britain Living  Age  141 

Mond,  Sir  Alfred,  Bart.,  M.  P.  Canadian-American 

Reciprocity  Agreement Living  Age  145 

Canada's  Free  Hand Nation  161 

Reciprocity  and  the  Farmers Nation  163 

Hay,  Eugene  G.  Future  of  Canada  and  Reciprocity 

with  the  United  States Review  of  Reviews  166 

NEGATIVE    DISCUSSION 

Silly  Season  at  Washington American  Economist  179 

"Reciprocity"  with  Cuba American  Economist  181 

Experiences  in  "Reciprocity." American   Economist  182 

Chasing  the  Reciprocity  Rainbow American  Economist  188 

Canadian    Agreement    American  Economist  190 

Plain  Truth  About  the  Proposed  Reciprocity  Agreement.  . 

American    Economist  203 

Reciprocity  Not  Favored  by  the  Country  Generally 

American    Economist  206 

Dodge,     Arthur    J.       Reciprocity    is     Losing     Ground. 

American     Economist  207 

"Reciprocity"  is  More  in   Doubt.  .American   Economist  212 
Both   Sectional   and    Partisan.     Mulhall    (Okla.)    Enter- 
prise   American    Economist  214 

White,   G.   C.    Proposed  Agreement   as   Viewed   by  the 

Farmer Journal   of   Political   Economy  215 


BRIEF 


Resolved,  That  the  United  States  should  adopt  the  policy 
of  entering  into  reciprocal  trade  treaties  with  foreign  nations. 

INTRODUCTION 

I.  Of  late  years  there  has  been  an  increasing  discussion 
of  the  advisability  of  entering  into  reciprocal  treaties 
with  foreign  nations.  This  discussion  has  doubtless 
had  its  origin  in  the  facts  that  there  is  a  well  defined 
movement  on  foot  in  favor  of  conserving  our  natural 
resources,  and  that  during  the  past  few  years  the  cost 
of  living  in  the  United  States  has  increased  at  an 
unusual  rate. 

II.  President  Hadley  of  Yale  says:  "Reciprocity  is  a  rela- 
tion between  two  independent  powers  such  that  the 
citizens  of  each  are  guaranteed  certain  commercial 
privileges  at  the  hands  of  the  other." 

III.  The  first  reciprocal  treaty  of  importance  which  the 
United  States  entered  into  was  with  Canada  in  1854. 
This  treaty  covered  all  natural  products,  i.  e.  products 
of  forest,  field,  mine — not  manufactured  produce.  The 
treaty  lasted  for  twelve  years.  The  United  States  has 
had  other  reciprocal  treaties  of  importance. 

AFFIRMATIVE 

I.     The   policy  of  reciprocal  trade  treaties  is  in   harmony 

with  our  system  of  protection,  for, 

A.  It  is  granted  for  the  purpose  of  off-setting  the  dif- 
ference in  the  cost  of  production  at  home  and 
abroad. 

i.     Professor  Taussig  of  Harvard,  before  the  Ways 
and    Means    Committee    of   the    House,    said, 


x  BRIEF 

"The  basic  reason  for  the  protective  policy 
was  to  shield  the  workingmen  from  competi- 
tion with  underpaid  labor  of  over-crowded 
countries." 

2.  President  Taft  in  a  special  message  to  Congress 
relative  to  Canadian  reciprocity  said:  "This 
is  not  a  violation  of  the  protective  principle 
as  that  has  been  announced  by  those  who 
uphold  it." 

B.  It  meets  conditions  as  they  exist  in  various  coun- 

tries with  which  we  have  important  trade  rela- 
lations.  For  example,  take  Canada: 

1.  The  general  industrial  and  social  conditions  of 

the  United  States  and  Canada  are  almost  uni- 
form, i.  e.,  in  ancestry,  in  language,  in  institu- 
tions, in  labor  conditions  and  in  wages. 

2.  Canada  is  under  populated.     She  has  two  peo- 

ple to  the  square  mile  as  compared  with  our 
thirty-two  to  the  square  mile. 

3.  Wage  conditions  are  practically  the  same. 

C.  It  supplements  the  protective  policy,  for, 

i.  In  making  concessions  the  labor  and  industrial 
conditions  of  each  country  are  considered  in 
detail. 

II.     The  reciprocal  policy  would  promote  great  friendly  re- 
lations with  countries  now  competitors,  for, 

A.  It   will   prevent   commercial    warfare    between    the 

nations,  for. 
i.     There  will  be  no  object  in  retaliating. 

B.  It  gives  expression  to  the  attractive  forces  between 

the  countries,  such  as,  the  geographical  advan- 
tages, the  close  relationship,  common  sympa- 
thies, identical  moral  and  social  ideas. 

C.  It   will   permit   a   closer   inter-dependence   between 

the  two  nations,  by  giving  freer  play  to  commer- 
cial forces. 

III.     The  reciprocal  policy  would  tend  to  conserve  our  na- 
tural resources,  for, 


BRIEF  xi 

A.  A  feasible   plan   of  conservation   is   to   gain  access 

to    more    supplies.    Canada,    Mexico,    and    South 
American   nations   all    have    these   supplies.     For 
example, 
i.     Canada  has: 

a.  840,000  square  miles  of  lumber. 

b.  Extensive  areas  of  wood-pulp. 

c.  Great  coal  fields. 

B.  By   lowering   the  tariff  wall   we   shall   gain   access 

to  such  resources,  for, 

i.  By  the  natural  flow  of  trade  and  of  reciprocal 
relations  these  raw  materials  would  come  to 
us. 

IV.     The  reciprocal  policy  would  benefit  us  from  the  point 
of  view  of  incoming  trade,  for, 

A.  The  incoming  trade  would  boom  American  trans- 

portation companies,  for, 

i.  It  would  cause  transportation  to  flow  north. and 
south,  as  well  as  east  and  west. 

B.  The  incoming  trade  would  increase  American  man- 

ufacturing companies,  for, 

i.  It  would  give  them  large  supplies  of  raw  ma- 
terials to  work  into  the  finished  product. 

C.  The    incoming    trade    would    be    of    advantage    to 

American  bankers,  for, 

1.  It    would    increase    the    business    of    American 

commission  men. 

2.  It  would   cause  large  quantities  of  grain  to  be 

marketed  in  the  United  States. 

D.  The  incoming  trade  would  be  of  benefit  to  Ameri- 

can  farmers,   for, 

1.  It    would    give    them    an    increased    supply    of 

"feeders." 

2.  It  would  give  them  an  opportunity  to  raise  and 

feed  more  cattle  on  American  corn. 
K.     The    incoming    trade    would    be    a    blessing   to    the 

American  consumer,  for, 
i.     It  would  lower  the  price  of  lumber. 


xii  BRIEF 

2.  It  would  reduce  the  cost  of  paper. 

3.  It  would  steady  our  markets. 

NEGATIVE 

I.  When  put  to   the   actual   test  reciprocity  has  proved   a 

failure,  for. 

A.  The  reciprocal  treaty  with  Canada  in  1854  was  not 

a  success,  for, 

1.  It  did  not  increase  our  export  trade. 

2.  It  brought  no  real  navigation  advantages,  for, 

a.  The  number  of  vessels  that  took  advantage 

of  the  provisions  of  the  treaty  was  small. 

b.  There    was    no   increase    in    our    navigation 

trade  due  to  this  treaty. 

3.  It  did   not   encourage   friendly   feeling   between 

the  two  countries,  for, 

4.  The   treaty  was   extremely   one-sided.      All   the 

advantages  in  the  treaty  went  to  Canada. 

B.  Reciprocity   treaties   negotiated   under   the   McKin- 

ley  Acts  have  been  failures,  for, 

1.  They  have  not  increased  our  export  trade. 

2.  They    have    absolutely    failed    to    produce    any 

desirable   results  whatever. 

C.  Reciprocity   treaties   negotiated  under  the   Dingley 

Acts  have  not  been  successful,  for, 

1.  They  have  failed  to  increase  our  export  trade. 

2.  They  have  failed  to  check  the  high  cost  of  liv- 

ing. 

II.  The  reciprocal  policy  will  not  benefit  the  ultimate  con- 

sumer, for, 

A.  Practically  all  the  products  that  would  be  involved 

are  now  controlled  by  trusts.     The  trust  will  be 
benefitted,  not  the  consumer,  for, 
i.     The    trust    can    regulate    the    price    which    the 
consumer  has  to  pay. 

B.  On    those   products   not   controlled    by   trusts,    the 

reductions,  if  any  be  made,  would  go  to  the  manu- 
facturers and  the  middlemen,  for, 


BRIEF  xiii 

I.  Such  reductions  would  be  on  raw  materials  that 
must  be  further  handled  by  manufacturers 
and  middle  men;  not  on  articles  directly  us- 
able by  the  consumer. 

III.  Reciprocity  would  not  increase  our  markets,  for, 

A.     The  reductions   on   manufactured  goods  would  be 
slight,  for, 

1.  Proposed  treaties  have  provided  only  for  slight 

reductions. 

2.  General  reductions  would  affect  our  "most  fav- 

vored  nation"  clause  in  treaties  with  other 
countries,  and  compel  us  to  grant  similar  re- 
ductions to  all  nations. 

IV.  The    reciprocal    policy   would    deprive    us    of    markets 

abroad.  For  example,  the  adoption  of  the  policy 
with  nations  in  the  western  hemi>pluMv  \\ould  arouse 
hostility  in  the  eastern  hemisphere. 

A.  It  would  hasten  the  adoption  of  a  protective  policy 

in  England,  for, 

I.  English  statesmen,  such  as  Balfour  and  Cham- 
berlain, have  stated  that  such  action  on  the 
part  of  America  would  result  in  an  English 
protective  system  being  adopted. 

B.  It  would  hasten  protection  in  Germany,  for, 

i.     German    legislation    is   already   tending    in    the 
direction     of     protection     against     American 
goods. 
V.     The  reciprocal  policy  would  injure  our  home  markets, 

for, 

A.     The    reduction    of   import    duties    into    the    United 
States    would     enable    other    nations     to     com- 
pete in  our  home  markets  in  products  in  which 
they  could  not  otherwise  compete, 
i.     This  would  be  true   of  lumber,  wheat,  barley, 

etc. 
VI.     The   reciprocal   policy  would   result   disastrously  from 

an  industrial  standpoint,  for, 
A.     It  will  mean  a  considerable  loss  of  revenue,  for, 


xiv  BRIEF 

i.     The  United  States  will  be  compelled  to  remit 

large  sums  now  secured  as  duties. 
B.     It  will  destroy  our  fishing  industry,  for, 

1.  Foreign  fisherman  work  for  less  wages.     Their 

vessels  are  operated  at  less  expense. 

2.  It  would  throw  American  fishermen  into  com- 

petition with  cheaper  lands,  lower  rates,  lower 
wages,  and  lower  cost  of  living. 

VII.     Reciprocity    is    the    wrong    method    of    adjusting    our 
tariff,  for, 

A.  It  is  unscientific,  for, 

i.     It  invites  no  general  investigation  of  our  com- 
plex tariff  system. 

B.  It  tends  toward  free  trade,  for, 

i.     Its  basic  idea  is  to  break  down  the  tariff. 

C.  It  is  but  a  temporary  arrangement,  for, 

i.     Reciprocal  treaties  cover  short  periods  of  time 
and  may  easily  be  revoked. 

D.  It  sacrifices  one  industry  at  the  expense  of  another. 

E.  It  is  a  discrimination  against  all  other  nations  for 

the  benefit  of  the   one  with  which  the  treaty  is 
made. 

F.  It  tends  to  postpone  a  scientific  adjustment  of  our 

tariff  schedules. 


BIBLIOGRAPHY 


An    asterisk    (*)    preceding   a   reference   indicates   that   the   en- 
tire article  or  a   part  of  it  has  been  reprinted  in  this  volume. 

GEXKRAL   BIBLIOGRAPHIES 

Library  of  Congress.  Select  List  of  Books  with  References 
to  Periodicals  on  Reciprocity  with  Canada.  Supt.  of  Docu- 
ments, Washington.  1907. 

Library  of  Congress.  List  of  References  on  Reciprocity. 
Supt.  of  Documents,  Washington.  1910. 

Library  of  Congress.  Additional  References  Relating  to  Reci- 
procity with  Canada.  Supt.  of  Documents,  Washington. 
1911. 

Latighlin,  J.  Lawrence,  and  Willis,  H.  Parker.  List  of  Ref- 
erences on  Reciprocity  and  Allied  Subjects.  (In  Their 
Reciprocity,  pp.  43(>;i).  The  Baker  and  Taylor  Co.,  New 
York.  1903. 

Supplementary  to  Library  of  Congress  bibliography  on  the  sub- 
ject. 

GENERAL  R  K  F  K  K  K  \  CES 

Books,    ]\imphlcts   and   Documents 

Allin,  C.  D.  and  Jones,  G.  M.  Annexation,  Preferential  Trade 
and  Reciprocity.  Mission  Book  Company.  Toronto,  Can- 
ada. 

American  Protective  Tariff  League,  339  Broadway,  New 
York  City.  X.  Y. 

Ashley,  Percy  Walter  Llewellyn.  Modern  Tariff  History.  tpp. 
252-62.  J.  Murray.  London.  1904. 

Unstable,  Charles  Francis.  Theory  of  International  Trade, 
with  Some  of  Its  Applications  to  Economics.  4th  ed.  rev. 
Macmillan.  1903. 

*Bliss,   William   D.  P.  ed.   New   Encyclopedia  of  Social  Re- 


xvi  BIBLIOGRAPHY 

form.    Reciprocity   Treaties   and   Agreements,   pp.    1050-1. 
Funk  and  Wagnalls  Company.  New  York.   1908. 

Clarke,  Albert.  Tariff  Made  Plain;  Seven  Short  Conversa- 
tions That  Bring  Out  Both  Sides,  Proofs  Cited  and  Aca- 
demic and  Popular  Errors  Corrected,  pp.  25-32,  75-9.  The 
Home  Market  Club.  Boston.  1906. 

Collins,  Paul  V.  Canadian  Reciprocity  vs.  American  Manu- 
facturers as  Well  as  Farmers.  P.  V.  Collins  Publishing 
Co.,  Minneapolis.  1910. 

Fish,  George  Mygatt.  International  Commercial  Policies, 
with  Special  Reference  to  the  United  States;  a  Text 
Book.  Macmillan.  1907. 

Foss,  Eugene  Noble.  Reciprocity  as  An  Economic  Policy  in 
Its  Relation  to  Foreign  Trade.  [In  National  Association 
of  Manufacturers  of  the  United  States  of  America.  Pro- 
ceedings of  the  Tenth  Annual  Convention.  Atlanta.  1905. 
PP-  152-71.]'  New  York.  1905. 

Hadley,  Arthur  T.  Reciprocity.  In  Lalor,  J.  J.  ed.  Cyclopedia 
of  Political  Science,  vol.  Ill,  pp.  537-9.  Charles  E.  Mer- 
rill &  Co.,  New  York.  1893. 

Herod,  Joseph  Rogers.  Favored  Nation  Treatment;  etc.  The 
Banks  Law  Publishing  Co.,  New  York.  1901. 

*Hornbeck,  Stanley  Kuhl.  Most-Favored-Nation  Clause  in 
Commercial  Treaties.  Bulletin.  University  of  Wisconsin. 
[Economics  and  Political  Science  Series,  Vol.  VI,  No.  2, 
Chapters  III  and  IV.]  -Madison,  Wisconsin. 

*Laughlin,  J.   Lawrence,  and  Willis.  H.  Parker.   Reciprocity. 
The  Baker  and  Taylor  Co.,  New  York.  1903. 
An   extensive  discussion   of  the   whole   field. 

National  Reciprocity  League.  Chicago,  111. 

Issues    magazine    devoted    to    reciprocity    movement,    and    fur- 
nishes information   on  subject. 

Porritt,  Edward.  Sixty  Years  of  Protection  in  Canada,  1846- 
1907,  etc.  Macmillan.  1908. 

.^Reciprocity  and  the  Philippine  Islands.  Pamphlet.  Manila 
Merchants'  Association,  Manila,  P.  I.  1911. 

Shaw,  L.  M.  Current  Issues,  pp.  153-88.  D.  Appleton.  1908. 

Tariff  Commission,  London.  Proposed  Reciprocal  Trade  Ar- 


BIBLIOGRAPHY  xvii 

rangement  Between  Canada  and  the  United  States  of 
America.  2d  ed.  P.  S.  King  &  Son,  London.  1911. 

Taussig,  Frank  W.  Tariff  History  of  the  United  States.  G.  P. 
Putnam's  Sons,  New  York.  1901. 

U.  S.  Government  Material. 

In  addition  to  the  more  important  bibliographies  and  reports 
listed  herein,  the  congressional  records  abound  with  speeches  bear- 
ing upon  reciprocity. 

U.  S.  Statistics,  Bureau  of  (Dept.  of  Commerce  and  Labor). 
Reciprocity  Treaties  and  Agreements  Between  the  United 
States  and  Foreign  Countries  since  1850.  Washington. 
1904. 

U.  S.  Ways  and  Means  Committee.  Report  Concerning  Reci- 
procity  and   Commercial   Treaties,    [ist   Sess.   54th   Cong. 
House  Report  2263.]  Washington,  D.  C.  1896. 
An   especially  desirable  volume  for  debaters. 

Woolsey,  T.  S.  America's  Foreign  Policy.  Essays  and  Ad- 
dress. The  Century  Co.,  New  York.  1898. 

Magazines 

Annals  of  the  American  Academy.  29:  441-50.  My.  '07.  De- 
velopment of  the  Foreign  Trade  of  the  United  States. 
Elihu  Root. 

Annals  of  the  American  Academy.  29:  456-61.  My.  '07.  Brief 
History  of  the  Reciprocity  Policy.  William  Eleroy  Curtis. 

Annals  of  the  American  Academy.  32:  330-42.  S.  '08.  Commer- 
cial Relations  of  the  United  States  with  Canada.  John 
Ball  Osborne. 

Annals  of  the  American  Academy.  32:  383-93.  S.  '08.  Ameri- 
can Interpretation  of  the  Most-Favored-Nation  Clause. 
C.  L.  Jones. 

*American  Economic  Association.  Publications.  VII:  417. 
1892.  Reciprocity  Treaty  with  Canada  of  1854.  F.  E. 
Haynes. 

Current  Literature.  50:  231-44.  Mr.  '11.  Canadian  Reciprocity. 

Current  Literature.  50:  462-5.  My.  '11.  Canadian  Reciprocity 
and  the  Farmers. 

Independent.  70:  415-7.  F.  23.  'n.  Champ  Clark  Waves  the 
Flag. 


xviii  BIBLIOGRAPHY 

Journal  of  Political  Economy.  19:  527-41.  Jl.  '11.  International 
Aspects  of  Reciprocity.  H.  Parker  Willis. 

Monetary  Times.  46:  616-8.  F.  n,  Jn.  Reciprocity  Debate. 

Outlook.  98:  752-3.  Ag.  5,  'n.  Reciprocity  and  Its  Probable 
Effect. 

Review  of  Reviews.  43:  42-5.  Ja.  'n.  Will  There  Be  Reci- 
procity Between  the  United  States  and  Canada?  P.  T.  Mc- 
Grath. 

Review  of  Reviews.  43:  278-83.  Mr.  '11.  Reciprocity  Program, 
and  Opinion  at  Home  and  Abroad. 

AFFIRMATIVE  REFERENCES 

Annals  of  the  American  Academy.  23:  55-83.  Ja.  '04.  Reci- 
procity in  the  American  Tariff  System.  John  Ball  Os- 
borne. 

Annals  of  the  American  Academy.  29:  450-5.  My.  '07.  Reci- 
procity with  Continental  Europe,  Alvin  H.  Sanders. 

^Current  Literature.  34:  386-7.  Ap.  '03.  United  States  and 
Canada. 

*Forum.  29:  471-80.  Je.  'oo.  American  and  Canadian  Trade 
Relations.  J.  Charlton. 

*Forum.    32:    582-93.    Ja.    '02.    Reciprocity    with    Canada.    J. 

Charlton. 

/Independent.   53:  2874-7.   D.  5,  '01.   Reciprocity  with   United 
States.  J.  W.  Foster. 

Independent.  54:  667-71.  Mr.  20,  '02.  Reciprocity  with  United 

States.  J.  Charlton. 

'Independent.  54:  171 1-5-  JL  17,  '02.  Trade  Relations.  J.  Charl- 
ton. 

/Independent.  57:  1278-80.  D.  I,  '04.  Reciprocity  with  the  Unit- 
ed States.  J.  Charlton. 

,1  Independent    70:    265-7.    F.    2,    'n.    Trade    Agreement    with- 
Canada. 

Independent.  70:  365-7.  F.  16,  'n.  Agreement  with  Canada.- 

*Journal  of  Political  Economy.  19:,  527-41.  Jl.  '11.  Interna- 
tional Aspects  of  Reciprocity.  H.  P.  Willis. 

*Living  Age.  268:  491-2.  F.  25,  Jn.  America,  Canada  and 
Great  Britain. 


BIBLIOGRAPHY  xix 

*  Living  Age.  269:  67-76.  Ap.  8,  '11.  Canadian  American  Reci- 

procity Agreement.  Sir  Alfred  Mond. 
Nation.  78:  345-6.  My.  5,  '04.  Trading  with  Canada. 
'Nation.  92:  158-9.  F.  16,  'n.  Canada's  Free  Hand. 
*Nation.  92:  184-5.  F.  23,  'n.  Reciprocity  and  the  Farmers.  * 
North   American.    176:   400-9.    Mr.   '03.    Reciprocity   with    the 

United  States.  J.  W.  Longley. 
North   American.    178:    205-15.    F.    '04.    Reciprocity   with   the 

United  States.  J.  Charlton. 
Outlook.  72:  209-12.  S.  27,  '02.   Reciprocity  with  the  United 

States. 

Outlook.  73:  483-8.  F.  28,  '03.  Growth  of  Reciprocity  Senti- 
ment. J.  Charlton. 

Outlook.  78:  1065-6.  D.  31,  '04.  Canadian  Reciprocity. 
Outlook.  96:  994-5.    D.  31,  '10.   Farmers   and   the    Dominion^ 

Government. 
Outlook.   97:   244-5.   F.  4,   '11.   Canadian   Reciprocity  and   Its  „ 

Effect. 

Outlook.  97:  306-8.  F.  11,  '11.  Writing  on  the  Wall. 
Outlook.  97:  372-4.   F.   25,  '11.   Canadian  Reciprocity  Would  * 

Help  Our  Farmers. 

*  Review  of  Reviews.  28:  462-6.   O.  '03.  Reciprocity  with  the 

United  States.  E.  G.  Hay. 

\i;<; ATIVK  REFERENCES 

*American  Economist.  44:  90.  Ag.  20,  '09.  Silly  Season  at 
Washington. 

*  American  Economist.  44:  192.  O.  15,  '09.  "Reciprocity"  with 

Cuba. 

*American  Economist.  45:  206.  My.  6.  '10.  Experiences  in 
"Reciprocity." 

*American  Economist.  47:  20.  Ja.  13,  'u.  Still  Chasing  the 
Reciprocity  Rainbow. 

*American  Economist.  47:  62-6.  F.  3,  'u.  Canadian  Agree- 
ment. 

American  Economist.  47:  85.  F.  10,  'n.  Extremely  Good  for 
Canada. 


xx  BIBLIOGRAPHY 

American  Economist.  47:  89.  F.  17,  'n.  Divided  on  the  Free 
Trade  Port. 

^American  Economist.  47:  102.  F.  24,  'n.  Plain  Truth  About 
the  Proposed  Reciprocity  Agreement. 

American  Economist.  47:  118.  Mr.  3.  'u.  Reciprocity  That  is 
Unfair. 

American  Economist.  47:  300.  My.  19,  'n.  Reciprocity  is  a 
Step  Backward. 

*American  Economist.  47:  316.  My.  26,  'n.  Reciprocity  not 
Favored  by  the  Country  Generally. 

American  Economist.  47:  322.  My.  26,  'u.  How  It  Works. 

^American  Economist.  47:  323.  Je.  2,  'u.  Reciprocity  is  Los- 
ing Ground.. 

^American  Economist.  47:  325.  Je.  2,  'IT.  Reciprocity  is  More 
in  Doubt. 

^American  Economist.  47:  368.  Je.  23,  fn.  Reciprocity:  Both 
Sectional  and  Partisan. 

Canadian  Journal  of  Commerce.  72:  79.  Ja.  20,  'n.  Reciprocity 
Negotiation. 

Canadian  Journal  of  Commerce.  72:  150-1.  F.  3,  'n.  Reci- 
procal Tariff  Proposals. 

Canadian  Journal  of  Commerce.  72:  259-60.  F.  24.  'n.  U.  S. 
Trade  Proposals. 

Forum.  44:  655-62.  D.  '10.  Reciprocity  with  Canada.  P.  Mc- 
Arthur. 

Independent.  70:  176-9.  Ja.  26,  'n.  Reciprocity  in  Protection. 
L.  Young. 

Independent.  70:  696-701.  Ap.  6,  '11.  Danger  in  the  Misnamed 
Reciprocity  Scheme.  W.  Fordney. 

Independent.  71:  17-20.  Je.  6,  'n.  Dangerous  Political  Hybrid. 
P.  J.  McCumber. 

Industrial  Canada,  n:  441-5.  N.  '10.  Opposes  Reciprocity 
Treaty. 

*  Journal  of  Political  Economy.  19:  567-73.  Jl.  'n.  Proposed 
Agreement  Viewed  by  the  Farmer.  G.  C.  White. 

Literary  Digest.  42:  450-2.  Mr.  n,  'ii.  Canada  on  her  Dignity. 

Monetary  Times.  46:  717-8.  F.  25,  'u.  Trade  Ties  and  Annex- 
ation. 


BIBLIOGRAPHY  xxi 

Rural  New  Yorker.  70 :  204,  240,  280,  324,  364,   F.   18,  25 ;   Mr; 
4,  'n;  Mr.   18,  'n.   Canadian  Reciprocity. 

SPECIAL  BIBLIOGRAPHIES  ON  IMPORTANT  TOPICS 

I.     Reciprocity  Treaty  with  Canada,  1854. 

A.  Laughlin  and  Willis.  Reciprocity.  Chapter  2. 

B.  American    Economic    Association.    7:    417.    1892.    Rec- 

iprocity.   Treaty    with    Canada    of    1854.    F.    E. 
Haynes. 

C.  Annals  of  the  American  Academy.  23:  55-83.  Ja.  '04. 

Reciprocity  in  the  American  Tariff  System.  John 
Ball  Osborne. 

D.  Stanwood.  Tariff  Controversies.  V.  II.  pp.   135-8. 

E.  (U.    S.)    Monthly   Summary  of   Commerce   and   Fi- 

nance. No.  5.  Series  1901-2,  p.  1907. 
II.     Reciprocity  with   Hawaii. 

A.  Laughlin  and  Willis.  Reciprocity,  Chapter  3. 

B.  Taussig.  Tariff  History,  p.  279. 

C.  Annals    of   the   American   Academy.    23:    55-83.   Ja. 

'04.    Reciprocity  in   the  American   Tariff  System. 
John  Ball  Osborne. 

D.  Stanwood.  Tariff  Controversies,  V.  II.  pp.  192-4. 

E.  Treaties  and   Conventions   Between   United   States 

and  Other  Powers  (1776-1887).  pp.  540,  1187. 

F.  Journal  of  Political  Economy,  i :  280.  Our  Commer- 

cial Relations  with  the  Hawaiian  Islands.  F.   R. 
Clow. 

G.  (U.  S.)    Monthly  Summary  of  Commerce  and  Fi- 

nance. No.  5,  Series  1901-2.  p.  1907. 
III.     Reciprocity  and  the  Sugar  Question. 

A.  Laughlin  and  Willis.  Reciprocity,  Chapter  5. 

B.  Atlantic    101:  334.   Mr.   '08.   Lesson   in    Reciprocity. 

Frank  W.  Taussig. 

C.  Quarterly    Journal    of    Economics.    17:    44.    Sugar 

Question  in  United  States.  Frank  R.  Rtttler. 

D.  North   American.    190:   347-58.   S.  '09.   Brussels  Su- 

gar Convention.  Benjamin  Taylor. 


xx  BIBLIOGRAPHY 

American  Economist.  47:  89.  F.  17,  'u.  Divided  on  the  Free 
Trade  Port. 

^American  Economist.  47:  102.  F.  24,  'n.  Plain  Truth  About 
the  Proposed  Reciprocity  Agreement. 

American  Economist.  47:  118.  Mr.  3.  '11.  Reciprocity  That  is 
Unfair. 

American  Economist.  47:  300.  My.  19,  'n.  Reciprocity  is  a 
Step  Backward. 

^American  Economist.  47:  316.  My.  26,  'n.  Reciprocity  not 
Favored  by  the  Country  Generally. 

American  Economist.  47:  322.  My.  26,  '11.  How  It  Works. 

^American  Economist.  47:  323.  Je.  2,  'n.  Reciprocity  is  Los- 
ing Ground.. 

^American  Economist.  47:  325.  Je.  2,  'IT.  Reciprocity  is  More 
in  Doubt. 

^American  Economist.  47:  368.  Je.  23,  'n.  Reciprocity:  Both 
Sectional  and  Partisan. 

Canadian  Journal  of  Commerce.  72:  79.  Ja.  20,  '11.  Reciprocity 
Negotiation. 

Canadian  Journal  of  Commerce.  72:  150-1.  F.  3,  'n.  Reci- 
procal Tariff  Proposals. 

Canadian  Journal  of  Commerce.  72:  259-60.  F.  24.  'n.  U.  S. 
Trade  Proposals. 

Forum.  44:  655-62.  D.  '10.  Reciprocity  with  Canada.  P.  Mc- 
Arthur. 

Independent.  70:  176-9.  Ja.  26,  'n.  Reciprocity  in  Protection. 
L.  Young. 

Independent.  70:  696-701.  Ap.  6,  '11.  Danger  in  the  Misnamed 
Reciprocity  Scheme.  W.  Fordney. 

Independent.  71:  17-20.  Je.  6,  'n.  Dangerous  Political  Hybrid. 
P.  J.  McCumber. 

Industrial  Canada,  n:  441-5.  N.  '10.  Opposes  Reciprocity 
Treaty. 

^Journal  of  Political  Economy.  19:  567-73.  Jl.  'u.  Proposed 
Agreement  Viewed  by  the  Farmer.  G.  C.  White. 

Literary  Digest.  42:  450-2.  Mr.  n,  'n.  Canada  on  her  Dignity. 

Monetary  Times.  46:  717-8.  F.  25,  '11.  Trade  Ties  and  Annex- 
ation. 


BIBLIOGRAPHY  xxi 

Rural  New  Yorker.  70:  204,  240,  280,  324,  364,   F.   18,  25;   Mn 
4,  Jn;  Mr.   18,  '11.   Canadian  Reciprocity. 

SPECIAL  BIBLIOGRAPHIES  ON  IMPORTANT  TOPICS 

I.     Reciprocity  Treaty  with  Canada,  1854. 

A.  Laughlin  and  Willis.  Reciprocity.  Chapter  2. 

B.  American    Economic    Association.    7:    417.    1892.    Rec- 

iprocity.   Treaty    with    Canada    of    1854.    F.    E. 
Haynes. 

C.  Annals  of  the  American  Academy.  23:  55-83.  Ja.  '04. 

Reciprocity  in  the  American  Tariff  System.  John 
Ball  Osborne. 

D.  Stanwood.  Tariff  Controversies.  V.  II.  pp.   135-8. 

E.  (U.    S.)    Monthly   Summary   of   Commerce   and   Fi- 

nance. No.  5.  Series  1901-2,  p.  1907. 
II.     Reciprocity  with   Hawaii. 

A.  Laughlin  and  Willis.  Reciprocity,  Chapter  3. 

B.  Taussig.  Tariff  History,  p.  279. 

C.  Annals    of   the   American   Academy.    23:    55-83.   Ja. 

'04.    Reciprocity  in   the  American   Tariff  System. 
John  Ball  Osborne. 

D.  Stanwood.  Tariff  Controversies,  V.  II.  pp.  192-4. 

E.  Treaties   and    Conventions   Between   United   States 

and  Other  Powers  (1776-1887).  pp.  540,  1187. 

F.  Journal  of  Political  Economy,  i :  280.  Our  Commer- 

cial Relations  with  the  Hawaiian   Islands.  F.   R. 
Clow. 

G.  (U.  S.)    Monthly  Summary  of  Commerce  and  Fi- 

nance. No.  5,  Series  1901-2.  p.  1907. 
[II.     Reciprocity  and  the  Sugar  Question. 

A.  Laughlin  and  Willis.  Reciprocity,  Chapter  5. 

B.  Atlantic    101:   334.   Mr.   '08.    Lesson   in   Reciprocity. 

Frank  W.  Taussig. 

C.  Quarterly    Journal    of    Economics.    17:    44.    Sugar 

Question  in  United  States.  Frank  R.  Rutler. 

D.  North   American.    190:   347-58.    S.  '09.   Brussels   Su- 

gar Convention.  Benjamin  Taylor. 


xxii  BIBLIOGRAPHY 

IV.     Reciprocity  Under  the   McKinley  Act. 

A.  Laughlin  and  Willis.  Chapters  6-8. 

B.  Stanwood.  Tariff  Controversies.  V.  II.  pp.  264,  305. 

C.  Taussig.  Tariff  History,  p.  278. 

D.  Annals   of  the   American    Academy.   23:    55-83.  Ja. 

'04.  Reciprocity  in  the  American  Tariff  System. 
John  Ball  Osborne;  29:  456-61.  My.  '07.  Brief  His- 
tory of  the  Reciprocity  Policy.  William  Eleroy 
Curtis. 

E.  Quarterly     Journal     of     Politics.     7 :     26-39.     O.     '92. 

Reciprocity.    Frank  W.   Taussig. 
V.     The  Kasson  Treaties. 

A.  Laughlin  and  Willis.  Reciprocity.  Chapter  10. 

B.  Annals  of  the  American  Academy.  23:  55-83.  Ja.  '04. 

Reciprocity  in  the  American  Tariff  System.  John 
Ball    Osborne;    29:    456-61.    My.    '07    Brief    History 
of  the   Reciprocity  Policy.  William   Eleroy  Cur- 
tis. 

C.  (U.  S.)   Monthly  Summary  of  Commerce  and  Fi- 

nance. No.  5,  Series  1901-02,  p.  1907. 

D.  Taussig.  Tariff  History,  p.  352. 

E.  Atlantic.   88:    721-31.    D.    '01.    Expansion    Through 

Reciprocity.  John  Ball  Osborne. 


SELECTED  ARTICLES  ON 
RECIPROCITY 


GENERAL  DISCUSSION 

Reciprocity.  Chapter  I. 
Laughlin  &  Willis. 

The  term  "reciprocity"  as  now  currently  used  is  employed 
in  most  cases  with  only  a  vague  or  very  general  notion  re- 
garding its  meaning.  In  current  speaking  and  writing  it 
usually  implies  no  more  than  the  bare  notion  of  tariff  re- 
ductions made  by  some  specified  nation  or  country  in  com- 
pensation for  some  reductions  made  in  favor  of  such  a  na- 
tion by  a  second.  The  actual  definitions  of  the  word  now 
given  vary  widely,  both  in  defmiteness  and  in  what  they 
connote  regarding  the  nature  and  desirableness  of  the  policy 
to  which  they  relate. 

In  the  most  general  sense,  the  definition  furnished  by 
I 'resident  Hadley  may  be  accepted;  According  to  him: 
"Reciprocity  is  a  relation  between  two  independent  powers, 
such  that  the  citizens  of  each  are  guaranteed  certain  com- 
mercial privileges  at  the  hands  of  the  others."  It  thus  ap- 
pears that  he  makes  no  effort  to  confine  the  term  to  tariff 
matters,  but  regards  it  as  representative  of  a  broad  aspect  of 
commercial  policy.  In  this  view  of  things  a  mutual  grant  of 
"privileges"  is  the  essence  of  the  reciprocity  idea. 

A  further  attempt  is  made  to  define  reciprocity  when  it  is 


2  sKl.ECTED  ARTICLES 

specified  that  the  ''privileges"  to  be  granted  must  be  equiva- 
lent. Thus  one  recent  writer,  basing  his  definition  upon  a 
study  of  the  public  papers  of  the  presidents  of  the  United 
States,  remarks: 

"Reciprocity  is  the  granting  by  one  nation  of  certain  commer- 
cial privileges  to  another,  whereby  the  citizens  of  both  are  placed 
upon  an  equal  basis  in  certain  branches  of  commerce." 

Most  of  those  who  attempt  to  define  the  term  are  not 
content  with  specifying  that  the  word  reciprocity  means  a 
mutual  grant  of  commercial  privileges  and  that  such  grants 
must  be  ''equivalent."  but  attempt  to  confine  the  word  to 
tariff  concessions  purely.  Thus,  according  to  one  authority, 
reciprocity  is: 

"A  term  for  an  arrangement  between  two  countries  having  a 
protective  tariff  against  other  countries,  to  admit  each  into  the 
other's  territories  certain  specified  taxable  articles  of  commerce 
duty-free,  or  at  exceptionally  light  duties.  The  classes  of  articles 
are  arranged  to  balance  one  another  on  one  side  and  the  other. 
Such  mutual  arrangements  are  sometimes  called  Fair  Trade,  as 
opposed  to  free  trade  and  thoroughgoing  protection." 

This  definition  may  be  taken  as  aptly  descriptive  of  the 
general  notions  on  the  subject  of  reciprocity.  It  implies 
nothing  with  regard  to  modifications  of  the  relations  between 
either  of  the  contracting  parties  and  any  third,  and  offers 
merely  a  description  of  the  act  involved  in  the  adoption  of  a 
reciprocity  treaty  by  the  two  parties  to  it. 

A  review  of  commercial  history  will  show  clearly  what 
the  term  reciprocity  meant  when  first  used  and  will  furnish 
the  means  for  a  better  comprehension  of  its  modern  signi- 
ficance. It  was  first  properly  employed  in  connection  with 
the  "navigation  system."  During  the  eighteenth  century  an 
elaborate  scheme  of  shipping  restrictions  had  grown  up. 
These  restrictions  sought  to  compel  trade  to  travel  in  bot- 
toms belonging  to  the  nation  which  enacted  the  navigation 
laws.  So  general  were  the  restrictions  imposed  by  these 
laws  that  it  finally  became  apparent  that  the  system  was 
proving  hurtful  instead  of  beneficial  to  shipping  interests. 
The  efforts  made  by  various  countries  to  hamper  each 
other's  trade  resulted  in  almost  as  much  injury  to  the  at- 
tacking country  as  to  its  antagonist. 

The    first   breakdown    came    shortly    after    the    American 


RECIPROCITY  3 

Revolution  when  England,  by  the  order  in  council  of  July  2, 
1783,  decided  to  put  American  ships  upon  the  same  footing 
as  British  so  far  as  concerned  direct  trade  with  the  mother 
country.  This  step  was  not  taken  from  any  humanitarian 
motives,  but  was  solely  due  to  the  fear  that  a  failure  to  con- 
cede the  point  would  result  in  a  loss  of  the  large  trade  with 
the  former  colonies.  By  the  same  order  in  council,  how- 
ever, which  relaxed  the  particular  provisions  of  the  naviga- 
tion laws  already  referred  to  with  regard  to  the  United 
States,  trade  with  the  West  Indies  was  confined  to  British 
ships,  the  design  being  to  deprive  the  United  States  of  the 
benefits  of  this  traffic  and  to  divert  it  to  British  North  Amer- 
ica. This  policy  led  to  sharp  protests  from  the  West  Indies 
themselves  and  from  various  British  interests  which  felt 
themselves  to  be  imperiled.  Nothing  of  any  importance, 
however,  was  done  until  after  the  war  of  1812.  In  1815,  a 
treaty  was  concluded  between  Great  Britain  and  the  United 
States  by  one  clause  of  which  it  was  agreed  that  the  ships  of 
neither  nation  should  be  liable  to  greater  charges  in  the 
ports  of  the  other  than  were  exacted  by  such  nations  in  its 
own  ports. 

The  credit  of  making  the  first  considerable  breach  in  the 
old  policy  is  due  to  Huskisson.  He  vigorously  attacked  the 
navigation  policy.  In  1822  acts  were  passed  which  permitted 
the  colonies  of  Great  Britain  to  export  their  produce  under 
much  more  favorable  terms,  and  gave  to  foreign  countries 
greater  liberty  in  the  carrying  trade.  A  more  important  vic- 
tory came  in  1823  when  by  an  act  of  that  year  it  was  declared 
that  any  country  might  export  goods  to  British  colonies  in 
its  own  as  well  as  in  English  bottoms.  The  act,  however, 
stipulated  that  the  privileges  therein  granted  should  be  met 
by  corresponding  treatment  on  the  part  of  the  countries  en- 
joying its  advantages.  Thus  was  developed  the  policy  which 
first  became  known  as  reciprocity.  It  will  be  observed  that 
it  consisted  essentially  in  a  relaxation  of  the  excessive  pro- 
tection accorded  by  the  navigation  laws  to  shipping.  Then, 
as  now,  any  reduction  of  protection  was  met  by  loud  out- 
cries on  the  part  of  certain  protected  interests.  The  real 


4  SELECTED  ARTICLES 

circumstance  which  had  compelled  the  relaxation  of  the  pro- 
tection to  shipping  was  the  fact  that  this  excessive  protection 
bade  fair  to  impede  the  progress  of  all  other  branches  of 
commerce,  and  even,  through  this  means,  to  destroy  the 
shipping  industry  itself.  The  competition  in  the  carrying 
trade  to  which  English  vessel-owners  were  just  then,  for  the 
first  time,  exposed  was  the  real  cause  of  the  depression  in 
shipping — a  depression  which  would  have  become  worse 
had  it  not  been  for  the  introduction  of  the  reciprocity  pol- 
icy. Huskisson  himself  showed  in  his  great  speech  in  the 
House  of  Commons,  May  12,  1826,  that  the  change  in  the 
navigation  laws  and  the  reciprocity  policy  were  the  direct 
result  of  petitions  from  a  certain  section  of  the  shipping  in- 
terests and  after  an  examination  of  persons  engaged  in  the 
shipping  trade. 

The  antagonism  of  the  vessel-owners  to  reciprocity  as 
applied  to  shipping  was  unable,  however,  to  check  the  then 
rising  tide  of  opinion  in  favor  of  free  trade  and  free  com- 
merce. Navigation  in  British  ships  actually  increased  be- 
tween 1821-1822  and  1830-1831  thirty-six  per  cent.  The 
amount  of  goods  passing  from  country  to  country  in  British 
ships  employed  in  the  foreign  trade  increased  forty-eight  per 
cent.,  British  tonnage  engaged  in  the  colonial  trade  increased 
twenty-seven  per  cent,  and  foreign  tonnage  employed  in  trade 
with  Great  Britain  increased  sixty-nine  per  cent.  With  the 
growth  of  British  manufacturing  came  the  need  of  closer 
reliance  on  foreign  countries  for  raw  materials.  Foreigners 
were,  for  a  long  time,  large  buyers  of  English  manufactured 
goods.  Everything  conspired  to  make  for  free  trade  in 
shipping,  and  freedom  of  navigation  tended  to  promote  the 
idea  of  greater  freedom  in  regard  to  customs  duties.  It 
was  to  be  expected  that  the  success  thus  experienced  in  con- 
sequence of  the  removal  of  trade  restrictions  would  have 
been  influential  in  removing  the  prejudice  in  favor  of  a  high- 
tariff  policy.  All  over  the  world,  the  tendency  toward  free 
trade  was  growing  stronger. 

The  organization  of  the  German  Zollverein  extended  the 
notion  of  reciprocal  concessions  in  regard  to  ships  to  the 


RECIPROCITY  5 

movement  of  goods  between  states  whose  interests  would 
be  helped  by  mutual  freedom  of  exchange.  This  tariff  un- 
ion, which  was  established  in  1824,  had  the  effect  of  greatly 
increasing  the  trade  between  the  German  States.  It  led 
directly  to  inquiry  on  the  part  of  foreign  countries  as  to 
whether  it  might  not  be  possible  to  inaugurate  customs  un- 
ions of  the  same  sort  which  would  have  an  equally  favorable 
influence  in  developing  foreign  trade.  The  movement  thus 
begun  gradually  developed  into  the  free  trade  era  which  con- 
tinued to  1870.  Great  Britain  repealed  the  corn  laws  during 
the  years  succeeding  1846,  and  in  1860  negotiated  a  treaty 
with  France  which  contained  liberal  commercial  concessions 
on  exports  and  imports  and  removed  all  the  prohibitions 
theretofore  resting  upon  the  commerce  of  the  two  countries. 
Following  this  treaty,  some  twenty-seven  other  arrangements 
were  negotiated  between  the  European  states,  granting  com- 
mercial concessions.  By  reason  of  the  fact  that  they  incor- 
porated the  so-called  "most  favored  nation  clause",  of  which 
more  will  presently  be  said,  the  concessions  embodied  in  the 
treaties  became  generally  accepted  among  the  European 
states  and  created  a  strong  movement  toward  an  almost 
absolute  freedom  of  exchange.  It  needs  hardly  to  be  said 
that,  under  these  conditions,  the  prosperity  of  European 
trade  increased  enormously.  The  commerce  of  Austria, 
Belgium,  France.  Holland,  Italy,  and  Great  Britain  grew  be- 
tween 1860  and  1873,  more  than  100  per  cent.,  while  the  trade 
of  the  same  countries  with  nations  not  having  reciprocity 
treaties  with  them  increased,  according  to  Mr.  David  A. 
Wells,  only  about  sixty-six  per  cent. 

In  the  United  States,  the  movement  toward  free  trade 
continued  to  move  along  somewhat  the  same  lines  as  those 
pursued  by  the  European  countries.  Clay's  American  sys- 
tem, which  was  enacted  into  the  tariff  of  1824  and  modified 
by  the  act  of  1828,  had  hardly  become  thoroughly  established 
when  it  began  to  crumble.  The  movement  toward  more  lib- 
eral customs  legislation  practically  culminated  in  the  less 
highly  protective  tariff  of  1846.  which  was  later  completed  in 
detail  by  that  of  1857.  With  the  Civil  War  a  new  era  began. 


6  SELECTED  ARTICLES 

Throughout  the  whole  of  this  antebellum  period,  the  no- 
tion of  reciprocity,  as  a  policy,  received  considerable  atten- 
tion. It  was  vigorously  advocated  in  certain  quarters  and  as 
vigorously  opposed  in  others.  Webster  was  one  of  the  prin- 
cipal opponents  of  the  system,  and  he  even  antagonized  the 
idea  of  reciprocity  as  applied  to  shipping. 

Owing  to  the  prevalence  and  growth  of  the  free  trade 
spirit,  however,  the  reciprocity  advocates  had  decidedly  the 
upper  hand.  It  was  urged  that  reciprocity  with  the  German 
Zollverein  should  somehow  be  introduced.  Should  such  an 
arrangement  be  put  into  operation,  said  these  advocates,  it 
would  be  possible  to  sell  American  raw  materials  to  much 
better  advantage,  as  well  as  in  larger  quantities.  On  the 
other  hand,  reciprocity  with  Germany  would  open  an  oppor- 
tunity for  the  purchase  of  manufactured  articles  cheaper  than 
they  could  be  had  in  Great  Britain  or  France,  while  the  nature 
of  the  German  tariff  was  said  to  be  such  that  the  treaty  would 
afford  stronger  guarantees  of  permanency  than  similar  ar- 
rangements with  either  of  the  other  countries  referred  to. 
Moreover,  it  was  believed  that  a  reciprocal  treaty  with  the 
Zollverein  should  doubtless  .have  the  effect  of  forcing  Great 
Britain  to  come  to  similar  terms.  As  a  result  of  this  agita- 
tion, a  treaty  was  actually  negotiated  in  1844  between  the 
Zollverein  and  the  United  States,  but  like  a  later  treaty 
with  Mexico,  was  rejected  by  the  Senate.  This  rejection 
was  made  on  the  ground  that  the  President  had  exceeded 
his  executive  authority  and  that  he  had  no  right  of  his  own 
motion  to  enter  into  such  arrangements  with  foreign  coun- 
tries, the  legislature  being  the  department  of  government 
by  which  revenue  laws  should  be  passed.  Thus  precisely 
the  same  criticism  was  offered  upon  the  action  of  the  execu- 
tive in  negotiating  the  Zollverein  treaty  which  has  been  so 
frequently  urged  within  the  last  year  or  two  by  members  of 
the  House  of  Representatives.  They  doubt  the  right  of  the 
treaty-making  power  to  enter  into  agreements  with  foreign 
powers  that  may  conceivably  result  in  infringing  upon  the 
authority  of  the  lower  house  to  pass  revenue  measures. 

For  the  sake  of  our  foreign  trade  it  was  greatly  to  be  re- 


RECIPROCITY  7 

gretted  that  the  Zollverein  treaty  was  not  put  into  opera- 
tion. By  the  terms  of  that  treaty,  articles  imported  to  the 
United  States  were  divided  into  three  classes,  one  of  which 
was  to  be  taxed  at  a  rate  not  exceeding  twenty  per  cent, 
ad  valorem,  while  a  second  was  dutiable  at  fifteen  per  cent., 
and  a  third  at  ten  per  cent.  Duties  on  wines  imported  from 
Germany  were  not  to  be  raised  above  the  level  existing  in 
1844.  In  return  for  this  concession,  the  Zollverein  agreed  to 
reduce  the  duties  on  American  tobacco  and  lard  and  to  main- 
tain the  tariff  on  rice  at  a  point  no  higher  than  it  then  had 
reached.*  Unmanufactured  cotton  was  to  be  free.  A  remin- 
iscence of  the  earlier  restrictions  on  shipping  was  found  in 
the  provision  that  the  tariff  reductions  were  to  apply  only 
to  goods  laden  on  vessels  of  one  of  the  contracting  parties, 
or  on  vessels  which  had  by  treaty  been  placed  upon  the  same 
footing  as  national  vessels,  and  in  any  event  the  goods  must 
c  directly  from  the  ports  of  one  party  to  those  of  the 
cither.  Just  how  far  the  rejection  of  this  treaty  was  actually 
due  to  the  constitutional  reason  assigned  in  the  Senate  de- 
hates  it  would  perhaps  be  difficult  to  say.  The  probability, 
iudtfin.ir  from  all  contemporary  evidence,  is,  however,  that 
the  reciprocity  treaty  with  the  Zollverein  came  too  early  in 
our  free-trade  movement  and  met  the  usual  fate  of  pioneers 
in  such  fields.  Its  defeat  was  doubtless  due  in  large  measure 
to  precisely  the  same  causes  which,  during  the  past  three 
years,  have  prevented  the  acceptance  of  any  of  the  reciproc- 
ity treaties  negotiated  by  Mr.  Kasson,  the  Special  Commis- 
sioner appointed  by  our  government  not  long  ago  to  negoti- 
ate for  commercial  advantages.  Then,  as  now,  the  constitu- 
tional argument  was  a  plausible  and  soothing  apology  for  a 
refusal  largely  dictated  by  the  wishes  of  interests  which 
feared  to  find  their  profits  reduced  by  foreign  competition. 

Reciprocity  agitation  very  shortly  assumed  a  new  form. 
The  idea  came  into  existence  that  there  might  be  developed 
on  this  side  of  the  ocean  a  commercial  union  which  should 
include  the  whole  North  American  continent.  In  order  suc- 
cessfully to  work  out  such  a  union,  it  was  necessary  to  make 
suitable  reciprocity  arrangements  with  Canada  on  the  North 


8  SELECTED  ARTICLES 

and  with  Mexico  on  the  South.  Thus  there  would  be  de- 
veloped a  commercial  system  somewhat  analogous  to  that 
which  had  been  produced  in  Germany  by  the  establishment 
of  the  Zollverein.  Instead  of  continuing  the  effort  to  get 
into  commercial  relations  with  the  European  customs  union, 
we  should  have  a  customs  union  of  our  own.  The  first  ne- 
gotiations looking  to  this  end  were  naturally  directed  toward 
Canada.  From  1846  on,  the  idea  was  actively  discussed  on 
both  sides  of  the  border  and  finally  culminated  in  the  Cana- 
dian reciprocity  treaty  of  1854.  This  agreement  managed  to 
prolong  an  existence  of  about  twelve  years,  when  it  was 
finally  overwhelmed  by  the  rising  tide  of  protectionism  and 
the  commercial  jealousies  and  political  hostilities  of  the  time. 
Its  history  will  be  reviewed  in  a  subsequent  chapter. 

Having  established  satisfactory  relations  with  Canada,  it 
remained  only  to  unite  ourselves  with  Mexico  on  the  same 
principles,  in  order  to  realize  the  idea  of  a  customs  union 
comprising  the  North  American  continent. 

Our  experience  with  the  Zollverein  treaty  was  repeated  in 
connection  with  negotiations  with  Mexico  late  in  1859.  It 
will  be  convenient  to  anticipate  the  historical  course  of  events 
and  refer  briefly  to  the  Mexican  experience  at  this  point. 
The  Mexican  treaty  was  negotiated  by  Mr.  McLane,  then 
Minister  to  Mexico.  It  was  designed  to  promote  friendly 
relations  with  that  country,  and  in  a  measure  soothe  the 
bad  feeling  which  still  existed  as  a  consequence  of  war  with 
the  United  States,  by  opening  up  a  profitable  field  of  trade. 
The  treaty  in  the  form  in  which  it  was  submitted  to  Con- 
gress contained  a  list  of  articles  from  which  that  body  was 
to  be  allowed  "to  select  those  which  being  the  natural  in- 
dustry or  manufactured  product  of  either  of  the  two  repub- 
lics may  be  admitted  for  sale  or  consumption  in  either  of  the 
two  countries  under  conditions  of  perfect  reciprocity  whether 
they  be  considered  free  of  duty  or  at  a  rate  of  duty  to  be 
fixed  by  the  Congress  of  the  United  States,  it  being  the  in- 
tention of  the  Mexican  Republic  to  admit  the  articles  in 
question  at  the  lowest  rate  of  duty,  and  even  free,  if  the 
Congress  of  the  United  States  consents  thereto."  Doubtless 


RECIPROCITY  9 

under  ordinary  conditions  this  treaty,  notwithstanding  its 
extremely  liberal  character,  would  have  been  ratified,  for  the 
free  trade  spirit  exemplified  in  the  tariff  act  of  1857  had 
then  gained  so  much  headway  in  the  United  States  that  it 
would  probably  have  been  able  to  carry  the  day.  The 
threatening  political  situation  and  the  fact  that  the  Demo- 
crats naturally  supported  the  idea  of  freer  trade  with  Mexico 
tended,  however,  to  divide  the  Senate  on  partisan  lines  and 
the  proposal  was  defeated  by  a  strict  Republican  vote. 

In  order  to  understand  the  subsequent  development  of 
our  tariff  policy,  it  will  now  be  necessary  to  deal  briefly  with 
one  aspect  of  the  reciprocity  system  viewed  from  the  stand- 
point of  international  law.  We  have  seen  that,  as  the  Euro- 
pean countries  gradually  developed  the  reciprocity  idea,  they 
did  so  in  accordance  with  the  diplomatic  principle  known  as 
the  "most  favored  nation"  theory.  This  principle  was  worked 
out  along  two  radically  different  lines  in  Europe  and  in  the 
United  States  respectively.  That  divergence  led  to  an  atti- 
tude on  the  part  of  European  countries  toward  our  later  reci- 
procity agreements,  different  from  the  one  which  was  adopt- 
ed by  the  United  States,  and  has  given  rise  to  some  friction. 
This  has  worked  in  certain  minds  against  further  extension  of 
reciprocity  agreements.  Inasmuch  as  the  two  different  con- 
ceptions of  the  most  favored  nation  clause  became  thorough- 
ly established  during  the  first  half  century  of  our  national 
life — the  period  during  which,  as  we  have  seen,  the  reciproc- 
ity and  free  trade  ideas  originally  developed — it  seems  con- 
venient to  deal  with  the  divergent  interpretations  of  the  most 
favored  nation  clause  at  this  particular  point. 

Early  commercial  treaties  were  negotiated  by  European 
nations  in  strict  accordance  with  the  idea  that  every  conces- 
sion granted  by  one  country  to  any  other  should  be  given 
only  in  exchange  for  similar  concessions  in  return.  In  other 
words,  the  negotiation  of  commercial  treaties  was  a  sort  of 
bargaining  process  in  which  either  nation  might  be  over- 
reached by  its  antagonist.  The  object  to  be  kept  in  mind  by 
either  party  was  the  negotiation  of  an  agreement  as  favorable 
to  it  as  circumstances,  and  the  relative  acuteness  of  the 


io  SELECTED  ARTICLES 

other,  would  allow.  It  is  evident  that,  supposing  two  na- 
tions, A  and  B,  to  have  negotiated  a  commercial  treaty 
granting  certain  privileges  by  mutual  agreement,  B  might  be 
at  a  considerable  advantage  with  respect  to  a  third  nation,  C, 
in  competing  for  the  trade  of  A.  If  subsequently,  therefore, 
an  agreement  should  be  entered  into  between  A  and  C, 
whereby  more  elaborate  concessions  were  allowed  C  than 
those  which  had  been  gained  by  B,  it  might  turn  out  that  B 
would  not  merely  be  outstripped  by  C  in  the  competition, 
but  might  even  be  worse  off  than  would  have  been  the  case 
had  no  treaty  been  originally  negotiated  with  A.  It  was  this 
situation  which  led  to  the  development  of  the  most  favored 
nation  clause.  Under  it,  states  sought  to  obtain  guarantees 
that,  in  case  future  commercial  concessions  should  be  offered 
to  their  competitors,  they  themselves  would,  ipso  facto,  come 
in  for  the  enjoyment  of  the  same  concessions.  Thus,  if  the 
two  nations,  A  and  B,  had  entered  into  a  commercial  ar- 
rangement, into  which  the  most  favored  nation  stipulation 
had  been  incorporated,  any  subsequent  treaty  entered  into 
by  A  and  C,  in  which  larger  concessions  were  grantee!,  C 
would,  by  the  nature  of  the  case,  extend  those  concessions 
also  to  B.  Now,  it  is  clear  that  the  interpretation  to  be 
placed  upon  the  clause  might  be  such  as  to  extend  those 
concessions  to  B,  only  in  case  B  should  pay  for  them  by 
the  same  return  concessions  granted  by  C,  or  should  simply 
be  permitted  to  enjoy  them  without  any  further  payment 
than  that  already  arranged  for  in  the  original  A  and  B 
treaty. 

Writers  on  international  law  distinguish  several  different 
forms  of  the  "most  favored  nation  clause."  They  enumerate 
more  particularly  the  so-called  "simply  reciprocal  form"  and 
the  so-called  "imperative  and  unconditional  form."  In  the 
first,  "where  reciprocity  is  the  foundation  of  every  clause  in 
the  treaty  dealing  with  a  subject  of  commerce  and  navigation, 
the  inference  points  to  reciprocity  as  the  foundation  for  the 
general  covering  clause  which  is  to  supply  omissions  and 
prevent  future  unfavorable  discrimination."  Under  the  oth- 
er interpretation,  the  commercial  favors  are  granted  to  all 


RECIPROCITY  ii 

countries  under  the  most  favored  nation  clause  "immediately 
and  without  condition;"  in  other  words,  without  compensat- 
ing privileges  offered  in  return.  It  is  easy  to  see  how  nations 
like  Great  Britain,  which  have  adopted  free  trade  as  their 
policy  and  which  have,  as  a  matter  of  fact,  nothing  to  offer 
in  return  for  a  reduction  of  duties,  would  be  likely  to  insist 
strenuously  upon  this  second  interpretation. 

The  "simply  reciprocal  form"  of  the  most  favored  na- 
tion clause  is,  of  course,  the  one  to  which  the  United  States 
has  consistently  held.  It  has,  from  the  beginning,  adhered 
rigidly  to  the  view  that  trade  concessions  offered  by  it  to 
some  other  country  need  not  become  common  to  a  third  coun- 
try with  which  we  had  treaty  relations  involving  the  most 
favored  nation  clause,  unless  that  third  nation  should  meet 
us  on  our  own  ground  by  granting  the  same  favors  that  we 
secured  at  the  hands  of  the  other  nations  with  which  we  had 
entered  into  treaty  relations.  In  the  treaty  negotiated  be- 
tween the  United  States  and  France,  February  6,  17/8,  the 
following  words  occur: 

"The  most  Christian  King  and  the  United  States  engage  mu- 
tually not  to  grant  any  particular  favor  to  other  nations  in  re- 
spect of  commerce  and  navigation  which  shall  not  immediately 
become  common  to  the  other  party,  who  shall  enjoy  the  same 
favor  freely,  if  the  concession  was  freely  made  or  on  allowing 
the  same  compensation  if  the  concession  was  conditional." 

In  Art.  IX.  of  the  treaty  with  Prussia,  in  1828,  and  in  Art. 
IX.  of  the  treaty  with  Austria,  in  1829,  occur  the  words: 

"If  either  party  shall  hereafter  grant  to  any  other  nation  any 
particular  favor  in  navigation  or  commerce,  it  shall  immediately 
become  common  to  the  other  party,  freely,  where  it  is  freely 
granted  to  such  other  nations,  or  on  yielding  the  same  compen- 
sation, when  the  grant  is  conditional." 

On  the  other  hand,  European  diplomacy  has  developed 
the  interpretation  of  the  most  favored  clause  along  a  differ- 
ent line,  following  out  the  second  of  the  two  interpretations 
already  referred  to.  As  things  now  stand,  most  European 
countries  admit  that  nations  which  have  granted  to  other 
nations  the  benefits  of  the  most  favored  nation  clause  have 
guaranteed  to  them  that  their  commercial  relations  shall  not 
be  less  favorable  with  it  than  shall  those  of  any  other  coun- 
try. In  other  words,  new  and  more  extensive  trade  conces- 
sions granted  by  country  A  to  C,  a  third  nation,  are,  ipso 


12  .      SELECTED  ARTICLES 

facto,  extended  to  B,  a  second  nation,  with  which  it  has 
originally  entered  into  commercial  relations,  while  B  obtains 
these  advantages  without  compensation  even  though  they 
may  have  been  paid  for  very  heavily  by  C.  This,  of  course, 
is  a  marked  reversal  of  the  original  interpretation  given  to 
the  "most  favored  nation  clause",  during  the  eighteenth  and 
the  first  half  of  the  nineteenth  century.  It  is  a  most  impor- 
tant point  to  bear  in  mind,  in  studying  the  development  of 
reciprocity  as  a  policy,  for  it  will  readily  be  seen  that  the 
adoption  of  the  European  interpretation  of  the  most  favored 
nation  clause  implies  either  the  giving  up  of  all  commercial 
treaties,  or  else  the  conscious  recognition  of  tariff  reduction 
as  a  system  to  be  regularly  applied  whenever  granted  in  an 
individual  case.  Reciprocity,  when  limited  to  isolated  in- 
stances, becomes  nothing  more  than  a  matter  of  internation- 
al bargaining,  which  may  or  may  not  be  undertaken  accord- 
ing as  the  circumstances  of  the  particular  case  seem  to  indi- 
cate. 

It  is  apparent  that  the  United  States  in  maintaining  its 
own  interpretation  of  this  clause,  reserving  the  right  to 
grant  tariff  concessions  only  in  return  for  certain  other  con- 
cessions, and  the  right  to  decide  whether  concessions  offered 
by  other  countries  are  equivalent  to  those  obtained  from  any 
particular  country,  occupies  a  vantage  ground  as  compared 
with  a  group  of  nations  adhering  to  a  different  interpretation 
and  granting  to  us  the  advantages  of  the  clause  which  we, 
however,  deny  to  them.  All  of  this  has  led  to  exceedingly 
unfavorable  comment  on  the  part  of  European  countries 
which  regard  our  attitude  on  the  subject  of  the  most  favored 
nation  clause  as  characteristically  selfish. 

With  the  repeal  of  the  English  corn  laws  about  1846 
carne  a  period  of  considerably  greater  relaxation  in  trade 
regulations.  The  more  liberal  spirit  which  thus  was  begin- 
ning to  find  its  way  into  European  legislation  continued  to 
grow  until  about  1860,  when  it  broadened  into  a  general  Euro- 
pean movement  toward  a  much  freer  tariff  policy.  In  that 
year,  a  treaty  negotiated  between  Great  Britain  and  France 
contained  liberal  concessions  on  goods  exported  by  the  con- 


RECIPROCITY  13 

tracting  countries,  and  removed  all  of  the  prohibitions  pre- 
viously laid  on  certain  kinds  of  traffic  passing  between  them. 
On  the  basis  of  the  principles  accepted  in  this  treaty,  there 
grew  up  an  elaborate  system  of  agreements  between  the 
several  European  states.  These  agreements  granted  commer- 
cial concessions  which,  by  reason  of  the  fact  that  they  were 
subject  to  the  ''most  favored  nation  clause,"  became  general- 
ly applicable  to  European  commerce  and  led  to  a  condition 
bordering  upon  freedom  of  trade. 

commercial  development  under  these  treaties  was  unex- 
pectedly favorable.  The  trade  of  Austria,  Belgium,  France, 
Holland,  Italy,  and  Great  Britain  increased  more  than  one 
hundred  per  cent,  from  1860  to  1873,  while  the  trade  of  the 
same  countries  with  nations  which  had  not  entered  into  reci- 
procity treaties  with  them  increased  only  sixty  per  cent.  In 
this  way,  a  policy  which  was  at  least  analogous  to  reciprocity 
gained  ground  and  seemed  to  meet  with  unexpected  success. 
It  undoubtedly  gave  general  satisfaction  within  the  countries 
which  were  affected  by  it.  Yet  it  was  not  long  before  a  dis- 
tinctly new  tendency  became  apparent.  In  the  years  immedi- 
ately following  the  crisis  of  1873,  there  began  a  definite  and' 
very  general  reaction  from  free  trade.  This  reaction  came  on 
insidiously.  In  part,  the  higher  tariff  policy,  which  was  then 
initiated,  was  due  to  the  Franco-Prussian  war,  which  pro- 
duced increased  expenditures  and  heavier  indebtedness  in 
consequence  of  .the  necessity  of  maintaining  heavy  arma- 
ments. Thus,  increased  taxation  was  required.  Moreover, 
it  is  maintained  by  some  that  the  new  modes  of  production 
which  were  then  gaining  the  ascendency  led  to  maladjust- 
ment, and  brought  about  a  struggle  to  dispose  of  certain 
kinds  of  goods  which  were  being  freely  manufactured  by  all 
countries,  and  which,  it  was  supposed,  were  in  danger  of 
overproduction.  In  consequence  of  this  movement,  came  a 
demand  for  protection,  in  order  that  the  producing  interests 
of  the  several  countries  might  be  safeguarded  in  the  control 
of  their  own  markets.  Thus  there  gradually  grew  up  a  sys- 
tematic attempt  to  encourage  domestic  manufactures  by  the 
levy  of  protective  duties.  At  the  same  time,  side  by  side 


14  SELECTED  ARTICLES 

with  the  protective  movement  thus  sketched,  there  was 
noted  a  tendency  to  develop  certain  kinds  of  industry  by  the 
payment  of  bounties  on  articles  of  domestic  production  or  by 
subsidizing  vessels  built  for  foreign  commerce.  These  ten- 
dencies were  not  exclusively  confined  to  Germany  and  France, 
although,  of  course,  the  effects  of  the  Franco-Prussian  war 
were  felt  with  the  greatest  intensity  in  those  two  countries. 
The  reaction  from  free  trade  spread  throughout  the  whole  of 
Europe,  and  by  1880  was  in  full  swing.  Some  of  the  smaller 
states  merely  imitated  the  example  of  the  more  powerful. 
Others  attempted  a  system  of  retaliatory  legislation,  think- 
ing to  break  down  the  duties  of  their  antagonists,  while 
others  fell  into  the  belief  that  their  producing  interests 
would  be  best  served  by  protection  irrespective  of  the  policy 
of  other  countries. 

In  1879,  Germany  adopted  an  elaborate  new  tariff,  mod- 
eled upon  the  idea  that  she  had  certain  paramount  economic 
interests  -which  must  be  cultivated.  These  interests  were 
supposed  to  center  about  the  production  of  grain,  on  the  one 
hand,  and  about  sundry  extensive  manufacturing  industries 
on  the  other.  The  tariff  adopted  under  these  circumstances 
was  not  a  system  of  high  duties  universally  applied  to  all 
imported  goods  without  exception.  It  aimed  only  to  fur- 
ther the  particular  interests  in  question  by  the  imposition  of 
duties  upon  products  likely  to  compete  with  them.  At  the 
same  time,  a  strong  effort  was  made  to  prevent  other  coun- 
tries from  retaliating  by  the  imposition  of  discriminating 
duties  upon  .German  exports.  The  various  political  disturb- 
ances which  occurred  subsequent  to  1880  furnished  oppor- 
tunity for  Germany,  by  throwing  her  political  influence  into 
the  'scales,  to  overbalance  the  economic  interests  of  sundry 
smaller  countries,  and  to  get  low  rates  of  duty  without  prom- 
ising to  admit  the  products  of  those  countries  on  similar 
terms.  So,  also,  in  Austria,  the  tariff  revision  act  of  1879  was 
a  step  in  the  direction  of  protection,  although  the  legislation 
was  still  moderate.  The  tariff  acts  of  1882  and  1887  carried 
Austria  still  further  in  the  direction  of  higher  duties.  Italy 
had  much  the  same  experience.  Starting  with  fairly  liberal 


RECIPROCITY  15 

legislation  in  1878,  the  schedule  of  duties  adopted  in  1883  and 
subsequently  modified  in  1887,  swung  to  the  farther  extreme 
of  protection,  in  many  instances  going  almost  so  far  as  to 
prohibit  trade.  In  Spain  a  protectionist  party  succeed- 
ed in  adopting  high  duties  as  early  as  1877,  and  various 
other  European  countries  of  the  second  class  followed 
suit.  By  1890  most  of  them  had  come  within  the  pro- 
tective boundary.  in  France  a  similar  reaction  was  in 
progress.  Duties  were  materially  raised  at  various 
times  during  the  later  seventies.  In  1881  came  a  vigorous 
effort  to  secure  the  adoption  of  a  maximum  and  minimum 
tariff  system.  Russia,  while  introducing  fewer  changes  into 
her  pmuctnc  >y^tem  than  had  been  made  by  the  other 
countries,  enforced  a  fairly  high  schedule  against  the  rest  of 
Europe  down  to  1893,  with  few,  if  any,  discriminations.  Eng- 
land alone,  among  the  important  European  countries,  main- 
tained her  determined  free  trade  attitude,  and  was  imitated 
only  by  Xnrway  and  Holland  among  the  states  of  secondary 
importance. 

The  system  thus  inaugurated  in  the  seventies,  and  carried 
out  during  the  eighties,  very  early  produced  distinct  results. 
Assisted  by  the  bounties  and  subsidies  granted  to  favored 
interests,  the  high  tariffs  already  considered  lead  to  serious 
complications,  and  tended  to  promote  the  existence  of  over- 
grown industries,  which  were  supported  only  by  heavy  taxa- 
tion of  the  consumer,  and  which  resulted  practically  in  sup- 
plying goods  to  the  foreigner  at  absurdly  low  rates.  Of  this 
kind  of  development  the  sugar  industry  furnishes  a  classical 
example,  but  it  was  not  the  only  industry  which  suffered  from 
the  unhealthy  stimulus  given  to  it  by  the  duties  and  boun- 
ties which  were  supposed  to  favor  it.  The  several  states  be- 
tfan  to  feel  keenly  the  need  of  some  policy  which  would  en- 
able them  to  buy  off  other  countries  from  the  enforcement 
of  retaliatory  duties  against  them.  Hence,  arose  a  system 
of  commercial  treaties,  by  which  it  was  undertaken  to  make 
bargains  designed  to  relieve  the  strain  of  retaliatory  duties 
imposed  in  return  for  the  heavy  taxation  with  which  the 
of  the  different  nations  had  been  burdened.  '  By  the 


16  SELECTED  ARTICLES 

opening  of  the  last  decade  of  the  century,  the  industrial  sys- 
tem of  Europe  had  become  a  tangle  of  overlapping  and  inter- 
woven commercial  agreements. 

It  was  necessary  to  find  some  way  of  relieving  the  con- 
fusion into  which  commercial  conditions  were  rapidly  falling. 
The  decade  1890-1900  is  characterized  predominantly  by  ef- 
forts of  this  kind.  It  was  necessary  for  each  country  to 
reckon  with: 

(i.)  The  interests  of  the  overgrown  industries  which  had 
been  stimulated  by  the  protection  previously  granted. 

(2.)  The  interest  of  the  general  producing  classes  of  each 
country,  which  were  likely  to  find  themselves  cut  off  from 
foreign  markets,  should  foreigners  be  stung  into  retaliatory 
measures. 

(3.)  The  most  favored  nation  clause,  which  had  become 
a  fundamental  maxim  in  European  diplomacy,  developing 
along  the  lines  already  traced  in  the  earlier  portion  of  this 
chapter. 

These  conditions  were  met  in  various  ways.  Yet  analysis 
shows  that  the  tariff  systems  adopted  after  1890  may  be 
classified  for  the  most  part  under  two  heads,  the  so-called 
''general  or  conventional"  tariffs,  and  the  "maximum  and 
minimum"  systems. 

The  characteristics  of  a  maximum  and  minimum  tariff 
system  are  found  in  the  fact  that  instead  of  having  two 
rates  for  a  few  articles,  it  has  two  rates  on  most  articles  on 
which  duties  are  imposed  at  all.  For  this  reason,  it  is  fre- 
quently called  the  double  tariff  system.  "In  the  application 
of  these  rates,  the  maximum  schedule  corresponds  to  the 
general  schedule,  and  the  minimum  schedule  to  the  conven- 
tional schedule  of  the  *  *  *  (conventional' tariff  system), 
since  the  minimum  rates  are  given  only  to  those  countries 
which  receive  the  most  favored  nation  treatment.  The  char- 
acteristic difference  between  the  two  systems,  however,  aris- 
es from  the  difference  in  their  origin.  The  minimum  schedule 
is  not  drawn  up  by  negotiations  between  the  executives  of 
two  countries,  but  is  framed  by  the  legislative  body  at  the 
same  time  that  the  maximum  schedule  is  made.  That  is,  the 


RECIPROCITY  17 

legislative  power  fixes  two  rates  of  duty  on  each  article  in 
the  tariff.  The  higher  rate  is  the  one  which  iixes  the  maxi- 
mum extent  to  which  those  articles  may  be  taxed  on  enter- 
ing the  country;  the  lower  or  minimum  rate  is  the  one  which 
fixes  the  minimum  extent  to  which  the  duty  may  be  lowered. 
If  it  is  desired  to  make  commercial  treaties  at  any  time,  these 
two  rates  show  the  exact  limits  between  which  the  treaty 
rates  are  to  be  fixed. 

At  the  present  time,  the  maximum  and  minimum  system 
has  been  most  generally  adopted  in  Europe.  It  is  employed 
by  France,  Russia,  Spain,  and  Norway,  as  well  as  by  Greece. 
In  South  America  it  has  been  adopted  by  Brazil.  France 
adopted  the  plan  in  1892,  and  Spain  gave  in  its  adherence  at 
about  the  same  time.  Russia  followed  the  French  example 
in  1893  and  the  other  countries  came  into  line  somewhat 
later.  Of  the  countries  which  now  employ  the  maximum 
and  minimum  system  France  is  perhaps  the  most  prominent. 
It  was  sought  to  secure  the  introduction  of  the  system  in 
that  country  from  1870  to  1881,  but  all  efforts  in  this  direction 
failed.  Not  until  after  1890  did  the  protectionist  spirit  in 
France  become  strong  enough  to  furnish  adequate  support 
to  the  effort  to  secure  the  introduction  of  the  maximum  and 
minimum  system.  There  had  been  intense  dissatisfaction 
with  the  commercial  treaties  which  had  preceded  the  intro- 
duction of  the  maximum  and  minimum  tariff,  and  the  bill  pre- 
pared by  M.  Meline,  which  was  adopted  in  January,  1892, 
was  intended  to  take  the  place  of  tariffs  already  in  existence. 
The  end  apparently  in  view  was  to  limit  the  executive  author- 
ity by  preventing  it  from  cutting  below  certain  rates,  which 
might  not  be  reduced  in  any  attempt  to  get  into  closer  rela- 
tions with  other  countries.  In  other  words,  it  was  sought  to 
fix  a  general  level  of  duty  below  which  home  industries  could 
count  upon  receiving  absolute  protection  without  any  inter- 
lYrence  from  troublesome  commercial  agreements  that  might 
be  entered  into  by  the  administration.  In  M.  Meline's  bill, 
by  making  a  large  difference  between  the  rates  of  the  maxi- 
mum and  those  of  the  minimum  schedule,  it  was  also  at- 
tempted to  induce  foreign  countries  to  buy  French  trade 


i8  SELECTED  ARTICLES 

concessions.  Thus,  if  foreign  countries  should  not  choose  to 
enter  into  amicable  commercial  relations,  enabling  them  to 
get  the  advantage  of  the  minimum  rates,  the  result  would 
be  that  they  would  suffer  a  very  heavy  disadvantage  with 
reference  to  their  competitors  in  French  markets.  M.  Me- 
line's  object  seems  also  to  have  been  to  make  the  schedules 
of  the  maximum  and  minimum  tariff  as  inclusive  as  possible, 
because  by  that  means  it  might  be  practicable  to  compel 
other  countries  to  grant  low  duties  in  return  for  the  mini- 
mum rates  if  they  wished  to  trade  with  France  at  all. 

At  the  present  time  there  is  a  difference  of  about  twenty- 
five  per  cent,  between  the  French  maximum  and  minimum 
rates.  The  maximum  rates,  for  instance,  would  be  one  hun- 
dred and  twenty-five  when  the  minimum  rates  are  one  hun- 
dred with  reference  to  the  value  of  the  commodity  on  which 
they  are  levied.  In  the  tariff  bill  of  1892  it  was  ordered  that 
the  minimum  rates  should  be  granted  to  all  countries  which, 
before  that  date,  "had  enjoyed  the  conventional  tariff  and 
which  after  that  date  had  given  French  commodities  the 
most  favored  nation  treatment."  "Portugal  was  subjected  to 
the  complete  maximum  tariff  and  the  United  States  to  a  part 
of  it." 

The  general  idea  upon  which  the  maximum  and  minimum 
tariff  systems  seems  to  have  been  adopted  by  France  was, 
that  the  system  of  commercial  treaties  containing  special 
provisions  is  now  practically  dead,  and  that  it  would  not  be 
wise  for  any  country,  therefore,  to  continue  the  use  of  them. 
It  had  been  found  that  the  making  of  the  treaties  on  special 
terms  with  foreign  countries  almost  inevitably  resulted  in 
irritating  discussion  as  to  tariff  rates  at  short  intervals,  and 
as  a  consequence  led  to  continual  disturbance  in  the  tariff 
system.  It  was  supposed  that  by  fixing  the  minimum  rates 
which  could  be  granted  to  foreign  countries,  and  then  author- 
izing the  executive  to  arrange  matters  as  he  might  see  fit, 
subject  to  these  limitations,  the  most  favored  nation  difficulty 
would  be  avoided,  and  it  would  be  possible  to  enter  into 
agreements  with  foreign  countries  whereby  concessions 
would  be  gained  for  French  goods.  All  foreign  countries 


RECIPROCITY  19 

would  thus  be  placed  on  equal  terms,  and  at  the  same  time 
the  fears  of  the  domestic  producer  would  be  relieved,  since 
he  would  now  enjoy  protection  through  the  assurance  of,  at 
all  events,  the  minimum  tariff  rates. 

On  the  other  hand,  the  so-called  general  and  conventional 
tariff  system  is  based  upon  the  origin  of  the  goods  imported 
from  different  countries,  and  distinguished  between  goods  ac- 
cording to  the  source  from  which  they  are  imported.  Inas- 
much as  it  is  nearly  impossible  under  European  conditions 
to  adopt  a  general  tariff  and  maintain  this  tariff  without 
change,  it  practically  results  that  there  must  be  an  under- 
standing between  the  countries  which  have  commercial  rela- 
tions with  each  other.  Supposing  that  a  treaty  has  been 
made  by  the  terms  of  which  some  general  tariff  concession, 
or  reduction,  has  been  made,  this  implies  an  alteration  in  the 
existing  tariff  rates.  Should  such  rates  be  substituted  for 
the  duties  comprised  in  the  general  tariff,  there  is  no  change 
in  the  system.  As  a  rule,  however,  the  granting  of  the  new 
rate  to  any  country  implies  the  establishment  of  a  new 
schedule  for  practically  all  goods.  The  original  or  general 
tariff  is  then  applied  to  those  countries  which  Have  entered 
into  no  special  commercial  arrangement  while  the  new 
schedule  is  applied  to  those  which  have  received  the  most 
favored  nation  treatment.  In  the  latter  case,  a  special  or 
"conventional"  tariff  is  established.  It  thus  appears  that  two 
distinct  schedules  of  duties  have  been  created  by  such  a 
tariff  system.  To  the  countries  which  receive  the  most  fav- 
ored nation  treatment,  there  is  practically  guaranteed  a  cer- 
tain lower  schedule  of  duties,  which  the  country  granting 
them  is  under  obligations  never  to  raise  during  the  life  of  the 
commercial  treaties  between  it  and  its  fellow  powers.  The 
general  tariff  duties  being  thus  matters  in  which  the  most 
favored  countries  have  no  direct  interest,  may  be  raised  at 
will  by  the  country  which  has  established  them  since  such 
action  on  its  part  is  of  no  consequence  to  its  treaty  asso- 
ciates either  one  way  or  the  other.  As  for  the  countries 
which  do  not  receive  the  most  favored  nation  treatment, 
they  have  no  ground  of  complaint  concerning  the  raising  or 


20  SELECTED  ARTICLES 

lowering  of  the  tariff,  since  they  have  entered  into  no  treaty 
agreements  whatever. 

It  will  be  seen  that  a  tariff  of  the  kind  already  described 
rose  up  under  the  influence  of  the  interpretation  of  the  most 
favored  nation  clause,  already  sketched,  in  a  natural  way. 
That  is  to  say,  a  tariff  is  first  established;  then  a  commercial 
treaty  is  entered  into  with  some  foreign  country  by  the 
terms  of  which  duties  are  lowered  in  exchange  for  conces- 
sions on  the  other  side;  then  these  lowered  duties  are,  of 
course,  automatically  extended  to  any  country  which  may 
receive  the  most  favored  nation  treatment.  Supposing  there 
are  no  countries  already  entitled  to  this  treatment,  it  hap- 
pens that  in  case  of  any  future  treaties  the  agreement, 
made  on  the  basis  of  the  most  favored  nation  clause,  auto- 
matically proceeds  upon  the  lines  laid  down  in  the  first  com- 
mercial treaty  as  already  described,  since  that  treaty  is 
evidently  .one  which  extends  the  most  favorable  treatment 
to  foreign  countries.  In  case  it  is  found  desirable  in  the 
later  treaties  to  add  articles  to  the  list  on  which  conces- 
sions are  made,  as  previously  established,  in  the  first  treaty, 
it  is  easy  to  see  that  by  the  most  favored  nation  principle 
once  more,  the  country  having  entered  into  the  original 
treaty  also  gets  the  advantage  of  the  gains  later  made  by 
other  countries.  In  consequence  of  these  conditions  it 
naturally  results  from  the  adoption  of  a  considerable  number 
of  treaties  that  a  lengthy,  if  not  all-inclusive  schedule  of 
duties,  is  made  up,  applicable  to  all  nations  which  enjoy  this 
particular  kind  of  treatment.  The  main  feature  of  the  sys- 
tem is  that  the  schedule  of  duties  has  been  produced  as  a 
result  of  negotiations,  made  first  with  one  country  and  then 
with  another.  The  duties  are  adjusted  to  the  particular 
needs  of  the  several  countries  entering  into  these  treaties, 
but  are  finally  amalgamated  together  into  a  lengthy  schedule 
which  can  be  taken  advantage  of  by  practically  all  of  them. 

Under  these  circumstances,  it  is  clear  that  the  original 
tariff  charged  by  the  general  schedule  becomes  nothing  more 
than  a  ground  for  argument.  In  order  to  obtain  a  vantage- 
point  from  which  to  make  concessions  it  customarily  hap- 


» 
RECIPROCITY  21 

pens  that  the  rates  of  the  general  tariff  are  fixed  abnormally 
high  in  order  to  afford  a  basis  of  concession.  At  the  present 
time,  the  tariff  system  thus  set  forth  is  in  vogue  in  Germany, 
Austria,  Switzerland  and  Italy.  Germany  has  now  entered 
into  commercial  treaties-  with  foreign  countries,  carrying  out 
the  system  just  described  and  numbering  no  less  than  twenty- 
eight  in  the  most  favored  nation  class.  She  has  also  eight 
special  tariff  treaties  in  which  tariff  agreements  are  par- 
ticularly made.  Thus  the  most  favored  nation  clause  is  the 
key  to  her  commercial  policy,  since  through  its  agency  in  the 
twenty-eight  treaties  already  referred  to,  the  conventional 
tariff  duties  have  been  applied  to  imports  from  this  long  list 
of  countries. 

According  to  a  recent  summary,  the  commercial  treaties 
now  in  existence  between  Germany  and  other  states  may 
be  divided  into  four  classes  as  follows:  , 

1.  Treaties  with  tariff  agreements  and  with  clauses  pro- 
viding for  the  most  favored  nation  treatment.     These  treat 
in  a  detailed  manner  of  the  important  features  of  the  com- 
mercial relations  of  the  two  states,  insure  to  the  merchants 
and   their   goods   the   treatment   accorded   the    most   favored 
nation;  they  also  contain  clauses  fixing  (or  "binding,"  as  the 
European  writers  term  it)  the  rates  of  the  tariff  in  their  own 
general   schedules,   diminishing  those   rates   or  guaranteeing 
that  they  shall  not  be  changed.     These  treaties  are  usually 
termed  "tariff  treaties,"  as  the  tariff  agreements  are  the  prin- 
cipal   feature    of    the    treaty,    and    the    most    favored    nation 
clause  is  regarded  as  a  matter  of  course.     These  treaties  are 
usually    made    between    countries    which    have    a    highly    de- 
veloped   commerce    with    each    other,    and    which    desire    to 
stimulate  this  intercourse.     To  this  class  of  treaties  belong 
those   which   Germany  has  made   with  Austria,   Russia,   Bel- 
gium, Switzerland,  Italy,  etc. 

2.  Treaties  with  tariff  agreements,  but  without  a  clause 
providing  for  the  most  favored  nation  treatment.     This  va- 
riety  of   treaty   is  usually   preferred   by  countries   which   do 
not  admit  the  principle  of  unconditional  most  favored  nation 
treatment.     Tariff  conventions,  however,  are  considered  as  a 


22  SELECTED  ARTICLES 

higher  mark  of  international  comity  than  the  simple  guaranty 
of  most  favored  nation  treatment,  and  hence  the  former 
usually  includes  the  latter.  For  this  reason  the  treaties 
which  the  United  States  has  made  with  France  and  Italy  con- 
tain certain  tariff  agreements,  but  do  not  contain  the  Euro- 
pean (unconditional)  most  favored  nation  clause. 

3.  Treaties   without   tariff  agreements,   but   with   a  most 
favored  nation  clause.     These  treaties  are  usually  composed 
of  a  few  general  provisions  in  which  the  contracting  parties 
assure    to    each   other   the   treatment   accorded    to   the   most 
favored   nation.     They   are  usually  called  "most   favored   na- 
tion treaties",  because  this  clause  represents  the  entire  value 
of  the  treaty.     Since    1860  this   class  of  commercial  treaties 
has  been  by  far  the  most  numerous  of  the  treaties  made  in 
Europe.     They    are    made    in    cases    where    the    commercial 
intercourse  between  two  countries  is  not  extensive  enough  to 
make  tariff  agreements  profitable  or  where  such  agreements 
cannot  be  reached  for   other   reasons.     On  January   i,   1901, 
Germany  had  only  eight  tariff  treaties,  while  she  had  twenty- 
eight  most  favored  nation  treaties. 

4.  Treaties  with  neither  tariff  agreements  nor  the  most 
favored   nation   clause.     Such   treaties    contain   general   regu- 
lations   concerning   the    commerce   between    the    two    states, 
and  are  made  only  with  such  countries  as  are  partially  open 
to   European    commerce.     Germany,    for   instance,    has   made 
such  treaties  with  China,  Korea,  Siam,  and  the  Kongo  Free 
State. 

In  England,  of  course,  a  different  idea  has  been  in  con- 
trol. The  events  of  the  past  few  years  have  had  no  in- 
considerable effect  in  weakening  the  adherence  to  free  trade 
principles  which  has  been  so  characteristic  of  that  country 
throughout  the  latter  half  of  the  nineteenth  century.  The 
utter  isolation  of  England  in  consequence  of  the  rising  tide 
of  protectionism  on  the  Continent  as  well  as  in  the  Western 
Hemisphere,  the  increasing  competition  in  foreign  markets, 
and  the  decreasing  superiority  of  English-made  goods  have 
together  led  to  a  certain  revival  of  the  belief  that  tariff 
duties  may  be  used  as  a  threat  wherewith  to  force  other 


RECIPROCITY  23 

countries  into  acting  in  a  way  that  would  throw  their  markets 
more  widely  open  to  English  goods.  The  agitation  for  "fair 
trade"  as  against  "free  trade"  has  attained  some  strength.  It 
has  been  demanded  by  some  that  tariff  duties  should  be  im- 
posed upon  goods  coming  from  all  those  countries  which  de- 
cline to  make  equal  concessions  to  the  goods  of  Great 
Britain,  and  that  free  trade  privileges  should  be  offered  only 
to  those  countries  which  accord  the  same  treatment  to  Brit- 
ish goods.  In  other  words,  what  we  call  reciprocity  has  in 
England  taken  shape  in  the  notion  of  "fair  trade",  by  which 
is  meant  the  policy  of  doing  to  other  nations  what  they  are 
actually  doing  to  the  home  country — taxing  their  products 
as  highly  as  they  tax  English  goods  and  no  more.  No 
special  basis  of  application  to  certain  particular  commodi- 
ties is  in  this  conception  given  to  reciprocity.  The  high  or 
low  rates  of  duty,  as  the  case  may  be,  are  to  be  charged  and 
paid  upon  all  goods  which  are  subject  to  such  high  and  low 
rates  abroad.  Reciprocity  here  becomes  largely  a  notion  of 
retaliation.  The  tariff  system  to  be  adopted  by  England, 
as  outlined  by  the  "fair-trade"  advocates,  is  made  to  depend 
upon  the  conglomerate  tariff  system  adopted  by  the  great 
variety  of  countries  with  which  it  may  happen  to  be  trading. 

As  is  well  known,  the  United  States  did  not  pass  through 
the  extended  free  trade  period  which  was  enjoyed  by  the 
countries  of  Europe.  The  Civil  war  blighted  the  free  trade 
movement  here  by  the  necessity  for  higher  duties,  just  as  the 
Franco-Prussian  war  later  blighted  it  in  Germany  and  France 
by  exigencies  of  a  similar  kind.  We  continued  our  high 
tariff  policy,  failing  to  reduce  the  duties  of  the  war  as  had 
been  promised  at  the  time  of  their  passage,  and  we  only 
aggravated  the  older  schedules  by  the  tariff  of  1883.  With 
the  passage  of  the  McKinley  act  in  1890,  we  continued  the 
later  protective  regime  which  has  lasted,  with  but  a  short 
interval,  until  the  present  time. 

Yet,  even  the  United  States  felt  the  pressure  of  the  pro- 
tective principle  in  the  same  way,  although  not  to  the  same 
extent,  as  the  European  countries.  The  absence  of  sub- 
sidies and  bounties  from  our  commercial  legislation  prevent- 


24  SELECTED  ARTICLES 

ed  the  protective  system  from  developing  to  the  full  extent 
.which  characterized  it  in  Europe,  while  our  economic  posi- 
tion was  not  such  as  to  force  us  to  depend  upon  others  to 
the  same  extent  as  many  of  the  European  countries.  As  the 
protective  system  attained  greater  and  greater  strength 
abroad,  American  producers  felt  themselves  subject  to  re- 
strictions of  increasing  severity.  The  heavy  duties  imposed 
on  our  goods  when  entering  European  countries  seemed  to 
make  it  increasingly  difficult  for  us  to  extend  our  markets. 
In  South  America  we  keenly  felt  the  competition  of  Euro- 
peans, partly  on  account  of  their  cheaper  processes  of  pro- 
duction and  partly  because  of  the  assistance  granted  Euro- 
pean merchants  by  commercial  legislation  which  enabled 
them  to  sell  some  of  their  goods  more  cheaply  abroad  than 
they  did  at  home.  We  had  already  tried  reciprocity  with 
Canada,  and  later  what  passed  for  reciprocity  with  Hawaii, 
but  we  had  never  given  any  extended  scope  to  the  doctrine. 
Not  until  we  began  to  feel  the  pressure  of  competition  and 
to  recognize  that  our  merchants,  too,  might  be  able  to  enter 
successfully  into  international  competition,  should  circum- 
stances be  made  favorable,  did  reciprocity  as  a  self-con- 
scious system  gain  a  considerable  support.  From  1884  on- 
ward it  definitely  increased  as  a  popular  movement,  parallel- 
ing the  growth  of  the  system  of  commercial  treaties,  whose 
development  among  the  European  countries  has  already  been 
outlined.  Like  them,  it  was  an  effort  to  get  away  from  pro- 
tection, so  far  as  that  policy  necessitated  loss  of  markets, 
and  discrimination  in  duties. 

It  is  now  possible  to  see  what  is  the  true  place  to  be  as- 
signed to  a  reciprocity  policy  in  the  general  scheme  of  tariff 
relations  between  the  countries  of  the  world.  As  compared 
with  France,  which  has  its  maximum  and  minimum  tariff 
system;  with  Germany,  which  has  its  general  and  conven- 
tional schedules;  with  Great  Britain,  which  has  practically  no 
tariff  at  all,  the  United  States  appears  as  a  country  posses- 
sing a  general  tariff,  nominally  offering  to  modify  this  tariff 
by  special  commercial  agreements  made  according  to  the 
current  demands  of  expediency,  and  holding  out  various 


RKCI  I'ROCLTY  25 

sorts  of  advantage,  first  to  one  country  and  then  to  an- 
other. It  is  true  that  the  provisions  of  the  two  tariff  acts 
framed  by  Messrs.  McKinley  and  Dingley  laid  down  a  basis 
for  reciprocity  in  certain  instances  which  should  be  uniform 
in  its  application  to  foreign  countries.  The  tropical  reci- 
procity of  the  Dingley  act.  like  that  provided  for  in  its  pred- 
ecessor, was  established  upon  uniform  and  recognized 
bases.  lUu  the  Dingley  act  also,  as  will  be  seen,  provided 
for  the  making  of  agreements  with  foreign  countries  which 
were  to  be  shaped  in  accordance  with  the  wishes  of  those 
who  negotiated  the  treaties.  It  was  scarcely  to  be  expected 
that  any  uniformity  could  result  from  treaties  subject  to  the 
necessities  and  to  the  demands  of  expediency  which  would 
apply  in  this  work.  One  who  examines  the  reciprocity 
treaties  now  pending  before  the  Senate  will  readily  under- 
stand how  it  has  resulted  that  the  reciprocity  of  to-day  is  no 
more  than  a  jumble  of  tariff  concessions,  dictated  upon  no 
logical  principles  and  subject  only  to  the  requirements  of 
the  negotiator.  We  appear  before  the  world  in  the  light  of 
one  who  seeks  to  dri\e  as  good  bargains  as  possible  with 
his  fellows,  but  who  strips  these  bargains  even  of  any  sem- 
blance <>f  equity  they  might  otherwise  have  by  concluding 
other  bargains  at  a  later  date,  which  destroy,  or  at  all  events 
may  destroy,  the  advantage  accruing  from  earlies  ones.  We 
arc  neither  willing  to  present  «>ur  reciprocity  agreements  to 
the  world  at  large  upon  equal  terms,  as  does  Krance  by  its 
maximum  and  minimum  system,  nor  do  we  stand  ready  to 
extend  to  all  the  benefits  gained  by  any  one  country  which 
enters  into  a  process  of  bargaining  with  us,  as  is  done  by 
'iermany.  We  offer  no  tariff  concessions,  save  to  those 
countries  which  we  believe  may  be  induced  to  grant  us  con- 
cessi<  iis  that  arc-  more  than  equivalent;  and  even  under  these  - 
circumstances  we  offer  them  under  a  constant  reservation  of 
the  power  to  practically  neutralize  the  benefits  of  the  agree- 
ment by  subsequent  action  if  we  see  fit  to  do  so.  Under 
these  circumstances,  it  is  not  surprising  that  the  reciprocity 
policy  has  thus  far  made  but  slender  progress.  The1  exten- 
sion ot  the  idea  has  been  checked  and  hampered.  The  de- 


26  SELECTED   ARTICLES 

velopment  of  the  freer  trade  which  might  have  been  attained 
has  been  nullified  by  the  narrow  construction  we  have  put 
upon  tariff  concessions  made  under  the  guise  of  reciprocity, 
and  by  the  unwillingness  to  lend  reality  to  that  policy  by 
making  it  apply  to  articles  of  some  degree  of  importance. 
From  this  brief  survey  of  the  growth  and  development  of  the 
reciprocity  idea,  as  a  feature  of  the  world's  tariff  policy,  we 
may  turn  to  a  detailed  study  of  our  efforts  to  put  it  into 
effect. 


Bulletin.   University   of  Wisconsin. 

Most  Favored  Nation  Clause  in  Commercial  Treaties.    Chap- 
ter   III.     Stanley    Kuhl    Hornbeck. 

When  the  United"  States  entered  the  list  of  nations  with 
the  enthusiasm  of  a  people  newly  independent,  united,  and 
thoroughly  conscious  of  its  economic  and  political  tasks,  one 
of  its  first  steps  was  to  invite  relations  of  amity  and  free  in- 
tercourse with  the  older  nations,  nations  from  which  it  need- 
ed so  much  and  to  whom  it  had  much  to  give.  We  at  once 
threw  open  our  ports  to  all  foreign  nations  and  endeavored 
to  secure  in  those  countries  the  privileges  enjoyed  by  their 
own  and  other  subjects,  offering  reciprocal  advantages.  Our 
earliest  agreements  show  a  desire  to  give  and  to  accord  the 
most  liberal  terms  to  international  trade,  to  avoid  exclusive 
relations,  and  to  base  our  commercial  intercourse  upon  the 
principle  of  give  and  take.  The  central  feature  in  our  com- 
mercial policy  from  the  first  has  been  reciprocity,  as  a  sur- 
vey of  our  treaties  will  clearly  indicate. 

As  has  been  pointed  out,  the  special  limiting  clause  which 
expresses  the  American  idea  in  commercial  treaty-making 
and  forms  the  basis  of  American  interpretation  was  first 
inserted  in  treaties  of  the  United  States.  It  was  inserted  in 
our  very  first  treaty,  and  it  has,  with  few  exceptions,  ap- 
peared in  all  our  treaties  from  that  day  to  this.  The  limiting 
clause  has  been  omitted  in  cases  which  we  will  mention, 
and  one  or  two  instances  of  irregular  interpretation  have 
occurred. 


RECIPROCITY  27 

When  our  friendly  proposals  for  commercial  reciprocity 
were  rejected  l>y  several  nations,  when  we  found  foreign  re- 
strictions and  discriminations  operating  against  us,  very  soon 
after  the  ratification  of  the  Constitution,  we  threatened  re- 
taliation. Our  economic  situation  was  such  that  an  extend- 
ed program  of  retaliation  was  inexpedient.  Consequently 
we  contented  ourselves  with  imposing  countervailing  ton- 
nage duties.  Our  object  was  three-fold,  to  force  what  we 
coiiMdcred  fair  conditions  of  trade,  to  gain  access  to  colonial 
markets,  and  to  add  to  our  own  revenue.  \Ve  were  especial- 
ly anxious  also  to  give  to  our  own  merchants  a  monopoly 
of  our  carrying  trade. 

During  the  next  twenty-five  years  our  foreign  relations 
exhibit  a  series  of  attempts  which  witness  an  urgent  desire 
»>n  the  part  of  our  government  to  secure  a  share  in  the  lucra- 
tive trade-  of  the  colonies  of  several  Kuropean  countries,  and 
to  secure  definite  statements,  in  treaty  form,  of  such  privi- 
leges as  foreign  nations  would  allow  us  both  in  their  colonial 
and  in  their  home  ports,  rather  than  to  leave  these  to  the 
whims  of  legislation.  Our  commercial  policy  was  then,  and 
has  been,  except  as  we  have  especially  favored  our  own  mer- 
chants, uniformly  in  the  support  of  equal  terms  to  all  na- 
tions. We  have  made  it  a  practice  not  to  grant  special  fa- 
vors, unrequited  to  some  nations  to  the  exclusion  of  others. 
\\  e  have  endeavored  to  grant  and  to  secure  equal  opportuni- 
ties in  our  commercial  dealings  with  all  nations. 

Soon  after  the  imposition  of  the  tonnage  duties  an  act 
\\a>  passed  authorizing  the  President  to.  suspend  these  duties 
in  favor  of  any  country  which  showed  us  similar  considera- 
tion. France  was  the  only  important  commercial  nation 
which  did  not  soon  meet  us  on  the  proposition.  At  first 
reciprocity  in  navigation  privileges  was  affected  by  legisla- 
tion only.  Great  Britain  preferred  that  the  stipulation  be 
incorporated  in  the  treaty  of  commerce  of  1815.  The  United 
States  soon  began  the  regular  incorporation  of  this  principle 
in  treaties. 

1'nropean  students  have  characterized  the  tariff  history  of 
the  Tinted  States  as  monotonous  in  the  extreme.  We  have 


28  SELECTED    ARTICLES 

had  no  great  struggle  such  as  was  waged  in  England  for 
thirty  years  over  the  abolition  of  the  Corn  Laws;  there  has 
been  no  great  turning  point  such  as  is  marked  in  English 
tariff  history  by  the  Cobden  treaty  and  in  Germany  by  the 
Caprivi  treaties;  our  tariff  controversies  have  developed  with 
some  single  great  commercial  issue.  These  facts  serve  to 
emphasize  the  general  consistency  of  American  tariff  policy. 
With  a  few  temporary  lapses,  after  we  had  once  inaugurated 
the  protective-tariff  system  our  commercial  policy  has  been 
intimately  associated  with  protective  principles.  As  a  result 
our  treaties  present  a  uniformity  and  a  regular  adherence  to 
a  given  form,  while  the  interpretation  which  our  statesmen 
have  put  upon  our  agreements  exhibits  a  unanimity  which 
may  be  sought  in  vain  in  European  practice. 

Throughout  this  tariff  history  we  see  running  an  unbrok- 
en line  of  tariffs,  almost  all  of  them  protective,  in  which  a 
single  schedule  tariff  with  fixed  duties  applies  to  imports 
from  all  countries  alike.  It  has  not  been  the  policy  of  the 
United  States  to  modify  its  tariff  by  treaties,  creating  there- 
by a  two-column  tariff.  The  double-tariff  is  a  modern  inven- 
tion of  European  countries.  But  the  United  States  has  had 
some  experience  with  the  tariff-treaty  in  the  form  of  reci- 
procity treaties.  In  these  certain  countries,  for  compensa- 
tion, have  been  given,  generally  on  account  of  unusual  geo- 
graphical position  or  political  circumstances,  reductions  from 
the  general  tariff;  but  each  time  in  return  for  a  practical, 
tangible  compensation. 

The  history  of  our  treaty-making  begins  with  the  French 
treaty  of  17/8.  In  article  II  of  that  treaty  we  find  the  prom- 
ise that  neither  country  will  "grant  any  particular  favor  to 
other  nations,  in  respect  to  commerce  and  navigation,  which 
shall  not  immediately  become  common  to  the  other  party, 
•f  *  *  freely  if  the  concession  was  freely  made,  or  on  allow- 
ing the  same  compensation,  if  the  concession  was  condi- 
tional." In  contrast  with  the  guarantee  of  immediate,  un- 
conditional extension  of  favors  to  the  co-contractor  con- 
tained in  the  majority  of  modern  European  treaties,  this 
clause  expressly  says  that  the  second  party  shall  enjoy  the 


RECIPROCITY  29 

favor  only  in  case  it  is  freely  extended  to  a  third  party,  and 
that  in  case  it  is  given  for  a  compensation  the  second  may 
not  be  excluded  from  it  but  may  have  the  right  to  demand  it 
"on  allowing  the  same  compensation."  This  makes  the  clause 
not  an  instrument  of  acquisition  but  a  preventive  against 
discrimination.  It  is  this  idea  which  has  been  written  into 
nearly  all  of  the  series  of  American  treaties  and  which  the 
stati-  department  has  always  insisted  regulates  them.  The 
treaties  oT  the  t'nited  States,  examine  them  at  such  intervals 
as  we  may  choose,  give  evidence  of  steady  continuance  in  the 
same  principle. 

( )ur  second  commercial  treaty  was  that  made  with  Swed- 
en, April  .}.  i  7S.},  by  whose  second  article  it  was  agreed  ''not 
to  -rant  hereafter  any  particular  favor"  (in  navigation  or 
commerce,  to  a  third  party)  "which  shall  not  immediately 
become  common  to  the  other  party,  who  shall  enjoy  the 
.same  freely."  etc.  *  "or  on  allowing  the  same  compensa- 
tion, if  the  concession  was  conditional."  In  articles  III  and 
IV  it  was  agreed  not  to  impose  higher  duties,  etc.,  "than 
those  which  most-fa\  orcd-nations  are  or  shall  be  obliged  to 
pay."  Comparing  this  with  the  French  treaty,  we  may  con- 
clude that  no  condition  attaches  to  the  most-favored-nation 
treatment  />n>  pi'iictcrilo.  but  that  the  treatment  pro  fnturo 
is  made  conditional  upon  compensation,  that  is,  the  operation 
is.  f.  .r  the  present  to  give  each  other  treatment  equal  to  that 
accorded  any  nation — for  the  future,  to  insure  each  against 
being  discriminated  against  by  the  other. 

\  ^urvey  of  our  treaty-making  up  to  1816,  shows  that  we 
concluded  six  commercial  agreements — with  France,  Sweden, 
I'rus-sia.  (ireat  Ilritain,  Sweden-Norway,  and  Algiers — con- 
taining most-favored-nation  clauses.  But  we  at  no  time 
ivoigni/ed  the  unconditional  principle.  We  regularly  estab- 
lished present  equality  and  guaranteed  future  concessions  on 
a  reciprocal  basis.  \Ve  established  no  differential;  quite  the 
contrary.  \o  exclusive  arrangement  was  to  be  allowed 
which  would  work  to  the  disadvantage  of  parties  to  other  of 
our  treaties.  The  opportunity  was  to  be  given  for  each  coun- 
try to  purchase  for  itself  such  favors  as  might  be  granted  to 


30  SELECTED  ARTICLES 

others  for  compensation.  That  this  principle  differed  from 
that  current  before  the  United  States  entered  the  field,  and 
that  it  differs  from  that  held  in  Europe  today  is  evident. 
But  it  is  well  to  notice  that  the  wording  used  in  American 
treaties  was,  and  is,  different  from  that  used  in  the  older  and 
the  newer  European  treaties. 

We  have  already  pointed  out  that  the  policy  of  the 
United  States  was  one  of  free  commercial  intercourse.  In 
these  early  treaties  we  find  numerouus  expressions  which  in- 
dicate the  intention  of  their  framers.  For  instance,  in  the 
preambles  of  the  treaties  with  France  and  Sweden  it  is  laid 
down  that  it  is  the  intention  to  fix  in  "an  equitable  and  per- 
manent manner  the  rules"  for  governing  the  commercial  re- 
lations of  the  two  states,  that  "the  most  perfect  equality  and 
reciprocity"  is  sought,  and  that  it  is  an  object  "to  avoid  all 
those  burdensome  preferences  which  are  usually  the  sources 
of  debate,  embarrassment  and  discontent."  But  each  coun- 
try is  to  be  absolutely  free  to  make  "those  interior  regula- 
tions which  it  shall  find  most  convenient  to  itself  *  : 
founding  the  advantages  of  commerce  solely  upon  reciprocal 
utility  and  the  just  rules  of  free  intercourse — reserving  withal 
to  each  party  the  liberty  of  admitting  at  its  pleasure  other 
nations  to  participation  of  the  same  advantages." 

It  would  be  profitable  to  repeat  from  successive  treaties 
to  show  how  the  United  States  continued  in  the  use  of  the 
"compensation"  clause.  The  fact  that  it  did  so  will  be  amply 
illustrated  when  we  turn  to  consider  cases  of  interpretation. 
It  is  far  more  important  that  we  notice  the  few  cases  of 
deviation  or  app-arent  deviation  from  that  which  we  consider 
the  established  rule. 

First  comes  that  group  of  treaties  known  as  "unilateral." 
The  United  States  made  treaties  of  this  sort  with  Morocco, 
1787  and  1836,  Zanzibar,  1833,  Japan,  1854,  China,  1858,  Egypt, 
1884,  and  the  Congo,  1891.  Of  these  treaties,  that  with  Japan 
is  no  longer  in^  force,  and  that  with  China  has  been  virtually 
suspended  by  subsequent  treaties.  In  the  application  of 
these  agreements,  as  the  United  States  does  not  give  most- 
favored-nation  treatment  in  return,  the  stipulation  may  be 


RECIPROCITY  31 

regarded  as  unconditional  most-favored-nation  treatment  /or 
the  United  States  in  the .  realms  of  the  other  parties  to  these 
contracts.  But,  from  the  exceptional  circumstances  under 
which  a  unilateral  treaty  is  made,  we  can  see  at  once  that 
these  do  not  constitute  an  infringement  of  the  established  rule. 

Next  comes  a  group  of  treaties  from  which  the  reciprocity 
clause  was  omitted.  This  includes  treaties  with  Holland, 
Oct.  8,  1/82,  Great  Britain,  1794  and  1815,  France,  1800,  and 
Hanover,  1840.  Four  of  these  contain  only  that  clause  which 
expresses  the  negative  side  of  most-favored-nation  treat- 
ment. That  with  France  of  1800  contains  also  the  clause  ex- 
pressing the  positive  side.  None  contains  the  words  "imme- 
diate" or  "unconditional."  They  are,  generally  speaking,  ex- 
ceptional to  United  States  practice  in  what  they  omit,  but 
there  is  no  valid  reason  for  supposing  that  they  guarantee 
"unconditional"  most-favored-nation  treatment. 

There  arc,  however,  three  United  States  treaties  which 
can  from  their  form  be  put  down  as  guaranteeing  absolute 
and  unconditional  most-favored-nation  treatment.  These  are 
the  Swiss  treaty  of  Nov.  25,  1850,  the  treaty  with  the  Orange 
Free-State,  Dec.  22,  1871,  and  that  with  Servia  of  Oct.  14, 
1881.  None  of  these  contain  the  compensation  clause.  In 
all  three  the  contracting  parties  guarantee  to  each  other  the 
immediate  enjoyment  of  commercial  favors  and  advantages 
which  they  may  grant  to  third  nations.  The  only  one  of 
these  which  has  ever  occasioned  difficulty  through  a  demand 
by  the  other  party  that  the  United  States  accord  it  uncon- 
ditional most-favored-nation  treatment  was  the  Swiss.  The 
clause  in  the  Swiss  treaty  which  caused  the  difficulty  has 
since  been  abrogated.  The  treaty  with  the  Orange  Free- 
State  has  fallen.  The  treaty  with  Servia  may  be  said  to 
stand  alone  as  an  unconditional  most-favored-nation  treaty 
t>f  the  United  States. 

A  survey  of  the  list  of  our  treaties  in  force  discloses  the 
fact  that  the  United  States  employs  the  clause  by  no  means 
as  regularly  as  was  once  the  case,  and  in  by  no  means  as 
large  a  proportion  of  its  treaties  as  is  the  practice  of  the 
leading  Kuropean  states.  The  reciprocity  agreement,  with- 


32  SELECTED    ARTICLES 

out  the  most-favored-nation  clause,  is  the  instrument  which 
has  been  employed  in  a  number  of  instances  in  recent  years 
for  regulating  our  commercial  dealings  with  several  impor- 
tant nations.  But  in  our  most-favored-nation  treaties  that 
form  of  the  clause  requiring  compensation  is  not  only  the 
prevailing  but  the  absolutely  determining  form. 


Bulletin.     University    of    Wisconsin. 

Most  Favored  Nation  Clause  in  Commercial  Treaties.    Chap- 
ter  IV.      Stanley    Kuhl    Hornbeck. 

As  in  our  treaty  making,  so  in  our  interpretation,  our 
practice  has  been  regular,  although  there  are  a  few  cases  in 
which  our  secretaries  of  state  have  strayed  from  the  lines  of 
construction  beaten  by  their  predecessors.  As  our  treaty- 
making  authorities  have  often  been  subjected  to  harsh  criti- 
cism abroad,  largely  because  our  treaty-making  machinery 
is  not  understood,  so  our  department  of  state  has  frequently 
been  attacked  for  its  construction  of  the  most-favored-nation 
'  clause  where  the  fault  was  not  one  of  inconsistency  upon 
our  part,  but  was  due  to  the  critics'  ignorance  of  our  prac- 
tice and  of  the  intention  of  the  negotiators. 

In  some  cases  our  secretaries  of  state,  even  while  follow- 
ing the  uniform  interpretation,  have  made  loose  statements 
concerning  the  nature  of  the  clause  in  justification  of  that 
interpretation.  Secretary  Fish  appears  to  have  considered  it 
right  to  apply  to  United  States  treaties  the  current  Euro- 
pean interpretation,  that  is,  to  regard  the  most-favored-na- 
tion clause  as  being  unconditional.  Secretary  Gresham  held 
a  view  different  from  that  which  ultimately  prevailed  con- 
cerning most-favored-nation  obligations  in  connection  with 
countervailing  duties,  and  his  position  regarding  the  mutual- 
ly exclusive  subject  matter  of  Articles  VI  and  XI  of  our 
treaty  with  Russia  of  1832  cannot  be  accepted.  Still  our 
diplomatists  and  our  courts  have,  wkh  remarkable  unanimity, 
maintained  that  in  the  operation  of  the  most-favored-nation 
clause  in  our  treaties,  even  though  the  clause  itself  may  not 


RECIPROCITY  33 

contain  an  express  stipulation  to  that  effect,  either  contract- 
ing party  may  always  require  an  equivalent  for  concessions 
which  are  demanded  in. virtue  of  the  clause,  except  when 
those  concessions  have  been  made  freely  to  third  parties. 

You  will  doubtless  have  understood  that  where  the  words 
"qualified"  and  "unqualified"  are  *  *  applied  in  the  most- 
favored-nation  treatment,  they  are  used  merely  as  a  conven- 
ient distinction  between  the  two  forms  (which)  such  a  clause 
generally  assumes  in  treaties,  one  containing  the  proviso 
that  any  Favor  granted  by  one  of  the  contracting  parties  to  a 
third  party  shall  likewise  accrue  to  the  other  contracting 
party,  freely  if  freely  given,  or  for  an  equivalent  if  condi- 
tional— the  other  not  so  amplified.  This  proviso,  when  it 

•  >ccur-  is   merely  explanatory,  inserted  out  of  abundant  cau- 
tion.     Its  absence   does  not  impair  the  rule  of  international 
law  that  such  concessions  are  only  gratuitous  (and  so  trans- 
ferable)   as  to   third  parties  when  not   based   on  reciprocity, 
or  mutually  reserved  interest  as  between  the  contracting  par- 
tics.     This  ground  has  been  long  and  consistently  maintained 
by    the    I'nited    States. 

The  I'nited  States  first  had  occasion  to  define  its  position 
exprc<>ly  and  to  defend  it  vigorously  in  the  controversy 
which  arose  over  the  provisions  of  the  treaty  of  April  30, 
1*03.  with  France,  article-  \  111  of  which  provides: 

In  future  and  forever  after  the  expiration  of  the  twelve 
year>.  the  ships  of  France  shall  be  treated  upon  the  footing 

•  f  the  most-favored-nation  in  the  ports  above  mentioned. 

When  subsequently,  under  the  operation  of  the  recipro- 
cal agreement  between  the  United  States  and  Great  Britain, 
July  3.  1815.  the  ships  of  the  latter  enjoyed  a  national  treat- 
ment in  the  harbors  of  the  United  States,  which  was  not  al- 
lowed to  the  ships  of  France,  the  French  government,  while 
refusing  to  grant  an  equivalent  to  the  United  States,  demand- 
ed the  same  treatment  which  was  accorded  to  England,  in- 

•  :-ting   upon   the   literal   interpretation   of  the   most-favored- 
nation    clause,   contending  that   "a   clause   which   is   absolute 
and   unconditional    can    not   be   subject   to   limitation    or   any 
modification  whatever."     The  United  States  government  cm- 


34  SELECTED   ARTICLES 

phasized  the  equivalent.  The  French  replied  that  France 
had  given  an  equivalent  at  the  time  of  the  cession  of  Louis- 
iana. The  United  States  argued  for  a  more  specific  equiva- 
lent, saying  that  if  they  were  to  give  France  freely  that  for 
which  England  had  paid,  France  would  be  enjoying  a  treat- 
ment more  favored  than  that  of  the  most-favored-nation. 
This  was  the  position  held  by  Mr.  Adams,  President  Monroe, 
and  Mr.  Gallatin,  whose  notes  have  been  repeatedly  quoted 
by  United  States  Secretaries. 

It  is  true  that  the  terms  of  the  eighth  article  are  positive 
and  unconditional;  but  it  will  readily  be  perceived  that  the 
condition,  though  not  expressed  in  the  article,  is  inherent 
in  the  advantage  claimed  under  it.  If  British  vessels  en- 
joyed, in  the  ports  of  Louisiana,  any  gratuitous  favor,  un- 
doubtedly French  vessels  would,  by  the  terms  of  the  article, 
be  entitled  to  the  same. 

But  the  allowance  of  the  same  privileges  *  ;:  *  to  a  na- 
tion which  makes  no  compensation,  that  have  been  conceded 
to  another  nation  for  compensation,  instead  of  maintaining, 
destroys  that  equality  *  *  *  which  the  most-favored-nation 
clause  was  intended  to  secure.  It  concedes  for  nothing  to 
one  friendly  nation  what  the  other  gets  only  for  a  price. 

To  M.  Visser,  this  argument  appears  beside  the  point. 
He  fails,  however,  to  show  conclusively  just  how  it  is  so. 
Although  it  is  true  that  "if,  on  examination,  it  appears  that 
the  third  nation  possesses  a  certain  favored  treatment,  it 
matters  little  to  others  in  what  manner  the  third  has  ob- 
tained it,"  this  does  not  make  a  breach  in  the  soundness  of 
the  general  contention  of  the  United  States.  The  whole 
difference  may  finally  be  sifted  down  to  a  distinction  be- 
tween the  two  views  as  to  what  constitutes  "a  favor."  It  is 
this  difference  of  opinion  which  causes  M.  Visser  to  charac- 
terize the  American  argument  as  a  "jeu  de  mots." 

In  1821,  Mr.  Monroe  worded  our  doctrine  clearly  in  his 
message  to  Congress.  In  1823  Mr.  Gallatin  stated  expressly 
that  in  our  view  the  extension  of  favors  to  a  third  party  is 
dependent  upon  the  giving  of  an  equivalent  in  compensa- 
tion. This  was  again  stated  by  Mr.  Livingston  in  1832.  It 


RECIPROCITY  35 

was  repeated  and  explained  by  Attorney  General  Gushing 
in  1853,  and  by  Secretary  Frelinghuysen  in  1884,  and  by  Sec- 
retary Sherman  in  1888. 

The  treaty  of  the  United  States  with  Columbia,  Oct.  3, 
1824,  provided  that  advantages  given  by  either  nation  to  a 
third  party  should  be  extended  to  the  co-contractant,  "freely 
if  the  concession  was  freely  made,"  upon  "compensation  if 
the  concession  was  conditional."  Later  the  United  States 
claimed  the  right  to  certain  advantages  which  Central  Amer- 
ica was  enjoying  under  a  treaty  with  Columbia.  When  the 
Columbian  government  pointed  out  that  its  treaty  with  Cen- 
tral America  was  made  upon  a  reciprocal  basis,  the  United 
States  conceded  that  its  claim  was  unwarranted,  and  pro- 
ceeded to  arrange  to  grant  to  Columbia  an  equivalent  for 
the  advantages  which  were  demanded. 

The  treaty  of  May  I,  1828,  between  the  United  States  and 
Prussia,  under  the  provisions  of  which  Germany  has  made 
repeat i-d  claims  against  the  United  States,  contained  ten 
articles  <»n  the  subject  o  freciprocal  commercial  relations. 
Article  IX  specifies  that  any  favor  granted  to  a  third  na- 
tion by  either  of  the  contracting  powers  shall  immediately 
become  common  to  the  other,  but  adds  the  conditional 
claus--.  A  >imple  illustration  of  the  rights  which  Germany 
has  claimed  by  virtue  of  this  most-favored-nation  clause  is 
that  made  in  1894,  that  German  salt  should  be  allowed  to 
enter  ports  of  the  United  States,  duty  free.  At  the  same 
time  American  salt  was  subject  to  duty  in  the  ports  of  Ger- 
many. Secretary  Olney  answered  that  the  position  of  the 
German  government  was  absolutely  untenable;  that  the 
principle  the  United  States  has  regularly  maintained  was  that 
of  reciprocity;  and  that  this  position  has  already  been  acqui* 
esccd  in  by  both  Germany  and  Great  Britain. 

When  Austria,  under  the  treaty  of  August  27,  1829, 
claimed  that  her  wines  should  enter  the  United  States  at 
the  same  rate  as  did  the  French  wines  under  the  treaty  of 
1831,  the  United  States  government  pointed  out  the  differ- 
ence between  favors  freely  granted  and  reciprocal  advan- 
tages, and  at  the  same  time  suggested  that  no  nation  intends 


36  SELECTED    ARTICLES 

to  bind  itself  by  a  condition  which  will  render  it  unable  to 
make  further  treaties,  a  fair  interpretation  of  the  most- 
favorcd-nation  clause  being,  that,  "if  the  duties  were  lessened 
in  favor  of  any  other  nation,  the  contracting  parties  should 
obtain  a  like  reduction  for  the  same  equivalent/'  The  Unit- 
ed States  has  carefully  avoided  placing  itself  in  a  position 
where  its  liberty  as  regards  future  negotiations  will  be  re- 
stricted or  where  other  nations  shall  enjoy  privileges  in 
trading  with  us  which  we  do  not  enjoy  in  return. 

After  the  conclusion  of  the  reciprocity  treaty  of  the 
United  States  with  France,  May  28,  1898,  the  Swiss  de- 
manded for  Swiss  imports  into  the  United  States  the 
same  concessions  made  to  France.  Their  claim  was  based 
upon  the  treaty  between  the  United  States  and  Switzer- 
land of  November  25,  1850,  which  provided  reciprocal 
most-favored-nation  treatment  in  all  that  relates  to  importa- 
tion, exportation,  and  transit,  and  that  no  favors  in  com- 
merce should  be  granted  by  either  to  a  third  nation  which 
should  not  immediately  be  enjoyed  by  the  other,  etc.  It 
was  shown  that  there  was  no  conditional  clause  in  this 
treaty  and  that  by  the  understanding  between  the  negotia- 
tors Switzerland  had  been  given  a  "full  and  unlimited 
guarantee  of  the  fullest  most-favored-nation  treatment." 
Secretary  Hay,  having  examined  the  original  correspond- 
ence, and  having  become  satisfied  that  the  American  pleni- 
potentiary Mr.  Mann  had  agreed  at  the  time  of  the  negotia- 
tion that  "no  limitation  should  be  attached  to  the  most- 
favored-nation  clause"  and  had  accepted  the  interpretation 
of  the  Swiss  government,  declared  that  "both  justice  and 
honor  require  that  the  common  understanding  of  the  high 
contracting  parties  at  the  time  of  the  executing  of  the 
treaty  should  be  carried  into  effect,"  although  this  formed 
an  exception  to  the  otherwise  uniform  policy  of  the  United 
States.  "Should  this  government  continue  to  give  to  Swiss 
products  gratuitously  all  advantages  which  other  countries 
acquire  from  an  equivalent  compensation,  it  would  expose 
itself  to  just  reproaches  from  other  nations  for  exceptional 
favoritism.  We  desire  that  our  friendly  international  policy 


RECIPROCITY  37 

should  be  maintained  in  its  uniform  application  to  all  our 
commercial  relations."  The  customs  officers  were  instruct- 
ed to  extend  to  imports  from  Switzerland  the  same  rates  im- 
posed upon  similar  French  goods  under  the  recent  treat- 
ment. On  March  23,  1899,  the  United  States  gave  notice 

•  >f  its  intention  to  stop  the  operation  of  the  articles  in  ques- 
tion   in    the    Swiss    Treaty   and    they    ceased    to   have    effect 
March    23.    1000. 

The  Swiss  in  return  for  this,  although  the  United  States 
was  in  no  way  discriminating  against  them  applied  their 
maximum  tariff  to  imports  from  the  United  States.  In  1906, 
when  the  new  Swiss  tariff  went  into  effect,  a  basis  for  recip- 
rocally advantageous  treatment  was  arrived  at,  but  without 
the  formality  of  a  treaty. 

The  position  of  the  L  nited  States  both  as  regards  the 
regular  interpretation  and  in  extraordinary  cases  was  thor- 

•  ughly    net    forth    in    the    diplomatic    correspondence    which 
followed  the  making  of  the  treaty  with  Hawaii,  January  30, 
1*75.     In   this,  a  treaty  of  strict  reciprocity   and  unusual  fa- 
vors, it  was  stipulated  that,  in  consideration  of  very  material 
advantages   in   return,  each  country  would  admit  certain  ar- 
ticles from   the  other,  duty  free  (articles  I  and  II),  and  that 
no  other  nation  should  have  the   same   privileges   in    Hawaii 
as  the   United  States,  nor  would  Hawaii  make    treaties  with 
any  giving  them  such  (article  IV).     The  Knglish  government 
protested.     Kngland  had  an  agreement  with  Hawaii  (Treaty, 
July    10,    1851),    that    neither    country    would    charge    higher 
duties    upon    articles    from    the    other    than    upon    the    same 
articles  from  any  third  nation.     It  has  been  usual  for  Unit- 
ed States  diplomats,  to  say  that,  as  between  two  states  which 
have   a    most-favored-nation    treaty,    each    may    demand    and 
secure  favors  given  by  the  other  to  a  third,  providing  it,  the 
second,  yvill  grant  to  the  first  concessions  equivalent  to  those 
^ranted  by  the  third.     But  under  the  provisions  of  this  treaty, 
Hawaii  was  unable  to  extend  even  this  right  to  Kngland,  so 
it  appears  that  in  order  for  her  to  keep  her  treaty  obligations 
with  the  United  States  it  was  necessary  for  her  to  break  her 
promise  to   Kngland  and  to  establish  an  effective  discrimina- 


38  SELECTED  ARTICLES 

tion  against  English  aud  other  goods.  From  this  fact  it 
might  seem  that  M.  Visser's  suggestion,  that  the  action  of 
the  United  States  in  this  case  was  not  in  agreement  with 
the  doctrine  which  it  maintains,  is  correct.  But  the  case 
was  an  exceptional  one.  Not  only  did  the  United  States 
hold  that  "the  concession  of  these  privileges  to  the  United 
States  can  not  form  the  basis  for  a  claim  to  like  privileges 
under  the  parity  clause  of  the  ordinary  form  of  treaty,  as 
such  special  privileges  were  given  in  return  for  special  valu- 
able considerations/'  but  it  considered  this  as,  for  geographi- 
cal and  political  reasons,  a  special  and  extraordinary  case. 
This  view  was  certainly  justified,  and  it  was  soon  so  recog- 
nized by  Great  Britain.  In  the  arrangement  between  Hawaii 
and  German}',  1878,  it  was  specified  that  the  special  advan- 
tages granted  to  the  United  States  should  not  be  invoked 
as  a  precedent  for  treatment  of  Germany.  The  Hawaiian 
case  was  held  exceptional  in  a  very  clearly  worded  decision 
in  the  United  States  Supreme  Court,  1887.  In  this  case,  in 
which  Denmark  relied  upon  the  most-favored-nation  clause 
in  her  treaty  of  April  26,  1826,  the  Supreme  Court  held: 

These  stipulations  *  *  *  do  not  cover  concessions  like  these 
made  to  the  Hawaiian  Islands  for  valuable  considerations.  They 
were  pledges  *  *  *  that  there  should  be  no  discrimination 
*  *  *  in  favor  of  goods  of  like  character  imported  from  other 
countries  *  *  *  .  They  were  not  intended  to  interfere  with 
special  arrangements  with  other  countries  founded  upon  a  con- 
cession or  special  privileges. 

In  this  connection  it  is  interesting  to  turn  to  the  treaty 
between  the  United  States  and  Tonga,  Oct.  2,  1886.  In  ar- 
ticle II,  after  stipulations  for  most-favored-nation  treatment, 
appears  the  following  clause: 

it  being-  understood  that  the  Parties  hereto  affirm  the  principle 
of  the  law  of  nations  that  no  privilege  granted  for  an  equivalent 
or  on  account  of  propinquity  or  other  special  considerations  comes 
under  the  stipulations  herein  contained  as  to  the  most-favored- 
nations. 

This  was  doubtless  inserted  on  account  of  the  difficulties 
which  had  arisen  over  the  Hawaiian  treaty. 

The  following  case  suggests  a  decided  inconsistency  on 
the  part  of  the  United  States.  In  the  treaty  between  the 
United  States  and  Prussia,  1828,  referred  to  above,  article  V 
reads:  ''No  higher  or  other  duties  shall  be  imposed  on  the 


RECIPROCITY  39 

importation  into"  cither  of  any  article  the  produce  or  manu- 
facture of  the  other  "than  are  or  shall  be  payable  on  the 
like  article  being  the  produce  or  manufacture  of  any  other 
foreign  country  ::  *."  Article  IX  reads:  "If  either  party 
shall  hereafter  grant  to  any  other  nation  any  particular  favor 
in  navigation  or  commerce,  it  shall  immediately  become  com- 
mon to  the  other  party,  freely,  where  it  is  freely  granted 

*  or  on  yielding  the  same  compensation,  when  the  grant 
is  conditional."    To  Germany's  contention  that  article  V  and 
that  only  in  return  for  an  equivalent  can  concessions  granted 
a  third   nation   on  a  reciprocal   basis   be   granted   to  the   sec- 
mid.     Xow  in  a  treaty  between  the  United  States  and  Hayti, 
November  3,    1864,   article    II    provided   that    favors   in   com- 
merce  and   navigation   which   either    had    granted    or    should 
grant    to   a   third   party    should   extend   ''in    identity   of   cases 
and  circumstances"  to  the  other;  "gratuitously  if  *  *  *  gratui- 
tous; or*      *  for  compensation  if  :::  *  *  conditional."    Article 
IX  provided:  "         *  no  higher  or  other  duties  upon  the  ton- 
nagr   ->r  cargo  of   the    vessels"   of   one    shall    be   levied   in   the 
ports   of   the   other  than   are    levied   or   collected   on    the    ves- 

of  the  most-favored-nation.  July  31,  1900,  1  layti  made 
a  treaty  with  France  which  was  evidently  reciprocal  in  its 
nature.  France  granting  Ilayti  certain  privileges  in  return 
for  which  Hayti  reduced  flic  tonnage  dues  paid  by  French 
sailing  vessels  and  the  dues  on  merchandise  landed  from 
them  if  of  French  origin.  The  United  States  government  at 
once  demanded  the  same  rights  for  American  vessels  under 
article  IX  of  the  treaty  of  1864.  The  Haytian  government 
invoked  the  application  of  article  II.  The  United  States 

-  rnment  answered  that  "Article   IX  is  quite  independent 
of  article    11,  and  creates  absolute  rights  which  this  govern- 
ment  can   not  fail  to  insist  upon."    The   correspondence   in- 
dicates   that    the    American    officials    were    decidedly   out    of 
patience  with   Hayti,  and  their  communications,  unfortunate- 
ly, maintain   this  position.     Unless  some   special  significance 
can  be  attached  to  the  phrase  "in  identity  of  cases  and  cir- 
cumstances"  in   article   II,   or   unless  "the   United   States   can 
point   out   some   particular   circumstance  whereby   the   grant 


40  SELECTED    ARTICLES 

made  by  Hayti  to  Erance  was  "freely  made"  rather  than  a 
return  for  compensation,  it  is  difficult  to  arrive  at  any  other 
conclusion  than  that  this  forms  an  arbitrary  exception  to 
the  practice  of  the  United  States. 

Another  case  in  which  the  action  of  the  United  States 
appears  open  to  criticism  is  that  of  the  treatment  accorded 
to  Colombia  under  the  Act  of  October  i,  1890.  This  Act 
admitted  certain  articles  to  the  United  States  duty  free,  but 
allowed  the  President,  if  he  considered  the  duties  of  any 
country  reciprocally  unequal,  to  suspend  the  free  list  upon 
goods  of  such  country.  After  the  failure  of  attempts  to 
negotiate  a  reciprocity  treaty  with  Colombia,  the  President, 
March  15,  1892,  suspended  the  free  list  on^certain  products 
of  Colombia.  We  had  made  reciprocity  arrangements  with 
four  European  and  six  South  and  Central  American  coun- 
tries, but  at  the  same  time  goods  from  Mexico  and  Argen- 
tina similar  to  the  products  in  question  were  enjoying,  gratui- 
tously, it  seems,  the  advantages  of  the  free  list.  Colombia, 
relying  upon  her  favored-nation-clause,  protested.  To  the 
insistent  and  fiery  notes  of  the  Colombian  Minister,  the  De- 
partment of  State  replied  in  a  lengthy  correspondence  which 
contains  excellent  suggestions  as  to  diplomatic  "good  form" 
but  fails  apparently  to  answer  the  logic  of  the  Colombians 
or  to  analyze  to  any  extent  the  justice  of  their  demands. 

Mr.  Elaine's  assertion  to  Mr.  Hurtado  that  "the  law  cited 
(the  Tariff  Act  of  1890)  applies  the  same  treatment  to  all 
countries  whose  tariffs  are  found  by  the  President  to  be  un- 
usual and  unreasonable"  does  not  altogether  meet  the  ques- 
tion involved. 

At  the  same  time,  the  practice  of  other  nations  presents 
instances  of  inconsistencies,  though  in  no  case  are  these 
sufficient  to  disestablish  the  regularity  of  their  interpreta- 
tions. In  1885,  under  the  guidance  of  Bismarck,  who  as- 
serted that  the  relations  of  Germany  and  the  United  States 
were  on  the  basis  of  the  most-favored-nation,  the  Bundesrat 
expressly  included  the  United  States  in  an  ordinance  grant- 
ing to  the  most-favored-nations  the  lower  duties  conceded 
to  imports  of  rye  from  Spain;  but  in  1883,  in  a  similar  ordin- 
ance extending  to  most-favored-nations  certain  concessions 


RECIPROCITY  41 

recently  granted  to  Spain  and  Italy,  the  United  States  had 
not  been  included.  In  1891,  Germany  negotiated  a  series 
of  treaties  with  European  countries  for  reciprocal  reductions 
of  import  duties.  To  have  been  consistent  with  the  principle 
advocated  in  1885,  Germany  should  have  extended  to  the 
United  States  the  reduced  duties  granted  to  various  Euro- 
pean countries.  This  she  did  not  do.  The  Saratoga  Con- 
vention of  August  22,  1891,  was  based  on  reciprocity  and 
was,  in  character,  a  bargain  in  return  for  concessions. 

Reciprocity  and  the  Philippine  Islands. 
Manila   Merchants'  Association. 

The  United  States  is  an  enormous  consumer  of  tropical 
and  sub-tropical  products.  No  class  of  commodities  has  en- 
joyed the  popularity  and  experienced  so  great  an  increased 
use  among  the  people  of  the  United  States  as  those  grown 
in  tropical  countries.  But  there  are  no  countries  with  which 
its  commerce  is  so  unequal — so  unfavorable  to  it  in  the 
matter  of  interchange  of  trade,  as  those  from  which  these 
products  are  obtained.  A  partial  list  of  imports  of  this  na- 
ture for  the  fiscal  year  1910,  taken  from  reports  of  the 
Ihireau  of  Statistics.  Washington,  will  convey  some  idea  of 
their  importance  as  a  factor  in  the  import  commerce  of  the 
United  States: 

Product                                  Amount  Value 

Cocoa     108,000,000  Ibs.  $  11,376,061 

Coffee     871,000,000  Ibs.  69,194,353 

Fibers      305,000  tons  32,418,839 

Manufactures    of    Fibers 57,624,245 

Fruits    and    Nuts 37,423,837 

Goat     Skins 115,000,000....  30,837,590 

(lums    of    various    kinds 13,504,125 

Rubber      138,000,000  Ibs.  106,861,496 

Matting     2,424,759 

Cocoanut    Oil    3,341,409 

Other    Nut    Oils 2,440,010 

l';ilm     Oil 5,590,535 

Raw     Silk 65,424,784 

Spices     37,000,000  Ibs.  2,762,947 

Sutfar     4,000,000,000  Ibs.  106,349,005 

Tea     85,000,000  Ibs.  13,671,936 

Leaf     Tobacco 46,000,000  Ibs.  27,751,279 

Manufactured     Tobacco 4,082,582 

Cabinet    Woods    and    Mahogany 4,652,740 


Total     $597,732,532 


42  SELECTED  ARTICLES 

Miscellaneous  articles  that  belong  in  this  table,  but  are 
not  enumerated,  will  swell  the  total  to  in  excess  of  six 
hundred  million  dollars. 

One  cannot  but  be  impressed  by  the  virtual  necessity, 
under  the  standard  of  living  that  now  obtains  in  the  United 
States,  of  practically  all  articles  named  above.  And  so  es- 
sential are  these  things  considered,  and  to  such  small  extent 
is  the  United  States  able  to  produce  them,  that  out  of  the 
entire  list  of  19  classes  of  commodities  enumerated,  compris- 
ing nearly  40  per  cent  of  the  total  imports  for  the  year, 
there  are  but  two  on  which  a  duty  is  levied  in  the  United 
States.  The  other  seventeen  enter  free  of  duty  no  matter 
from  what  quarter  they  may  come. 

If  the  United  States  were  selling  to  those  countries  from 
which  this  tremendous  flood  of  importations  is  pouring  in 
each  year;  a  proportionate  amount  of  its  own  products,  the 
commerce  would  stand  on  a  satisfactory  basis  and  there 
would  be  no  occasion  for  concern. 

But  it  is  not  selling  them  more  than  half  as  much  as  it 
buys  from  them  and,  unless  conditions  undergo  a  radical 
change,  it  never  will. 

To  the  casual  observer  unacquainted  with  the  actual  fig- 
ures and  existing  conditions,  it  would  seem  that  the  United 
States  should  supply  to  tropical  and  semi-tropical  peoples  a 
large  share  of  their  needs.  The  imports  of  such  countries 
are  made  up  for  the  most  part  of  three  principal  groups  of 
commodities,  viz:  Cotton  goods,  iron  and  steel  manufac- 
tures and  foodstuffs.  Cottons  comprise  approximately  30 
per  cent  of  the  whole  while  iron  and  steel  manufactures  and 
foodstuffs  in  varying  proportion,  amount  to  nearly  50  per 
cent. 

With  the  superior  advantages  enjoyed  by  the  United 
States  in  the  production  of  such  articles,  it  should  be  able  to 
rival  Germany  and  Great  Britain  which  are  the  most  power- 
ful competitors  for  the  world's  commerce.  But  though  sen- 
timent and  points  of  proximity  and  mutual  interest  may  be 
favorable,  it  is  not  able  to  secure  even  a  reasonable  minor 
share  of  the  trade  in  lines  that  it  should,  under  ordinary 


RECIPROCITY 


43 


rules,  control.  However,  the  explanation  of  this  is  not  diffi- 
cult. For  years  the  American  manufacturer  has  been  so  en- 
tirely occupied  with  the  work  of  supplying  the  home  market 
which,  on  account  of  being  highly  protected,  is  vastly  more 
profitable  than  the  foreign,  that  he  has  lacked  the  time,  if 
not  the  inclination,  to  cultivate  the  markets  of  other  coun- 
tries. The  United  States  has  been  developing  with  such 
wonderful  rapidity  that  the  energy  of  its  business  elements 
has  been  taxed  to  the  limits  of  their  capacity  in  providing 
the  requirements  of  the  home  field,  and  only  during  periods 
of  financial  economic  depression  has  serious  thought  been 
given  to  the  export  trade. 

But,  beyond  this,  the  protective  system  of  the  United 
States,  with  its  constant  tendency  to  increase  the  cost  of 
production  of  manufactured  articles,  through  the  necessity 
<>f  wage  scales  in  keeping  with  a  relatively  high  cost  of  liv- 
renders  difficult,  when  not  impossible,  competition  with 
European  nations  where  labor  is  cheaper,  the  standard  of 
living  lower  and  the  home  market  of  correspondingly  less 
value  to  the  manufacturer  and  competition  for  such  trade — 
which  has  developed  principally  in  tropical  and  sub-tropical 
countries — has  waxed  very  keen,  especially  between  Great 
Britain  and  Germany.  Belgium,  France,  Switzerland,  Austria 
and  Italy  are  able  to  compete  in  specialized  articles  on  a 
satisfactory  basis  and  the  United  States  produces  certain 
manufactured  articles,  including  agricultural  implements, 
sewing  machines,  typewriters,  cash  registers,  mining  and 
electrical  machinery,  etc.,  in  which  American  mechanical  and 
inventive  genius  enters  to  an  extent  that  places  them  beyond 
the  reach  of  competition  in  international  markets.  But  in 
the  commodities  that  make  up  the  great  bulk  of  the  world's 
commerce,  the  United  States  is  easily  distanced  by  Ger- 
many and  Great  Britain. 

There  are,  of  course,  other  factors  that  enter  into  the 
proposition  and  conduce  to  European  supremacy  in  the  trade 
of  those  countries  whose  own  export  trade  is  so  largely 
with  the  United  States.  The  European  manufacturer  has 
made  a  careful  study  of  the  markets  of  the  world  and  has 


44  SELECTED  ARTICLES 

conformed  to  the  requirements  of  those  markets  in  every 
particular.  The  tastes  of  the  people,  their  methods  of  doing 
business,  details  of  packing  where  climate  requires  other 
than  the  ordinary  package  or  transportation  facilities  make 
it  necessary,  the  current  fiscal  system,  language  and  every 
other  point  that  might  have  a  bearing  or  influence  on  trade 
is  taken  into  account.  On  the  other  hand,  the  American 
manufacturer  follows  an  inflexible  rule  in  matters  of  credits, 
packing  and  shipping  with  the  result  that  he  does  not  always 
hold  business  -when  he  gets  it,  even  though  his  goods  may 
be  preferred,  which  they  often  are. 

Thus  the  United  States  is  buying  annually  upwards  of 
six  hundred  million  dollars  worth  of  the  products  of  coun- 
tries that  buy  only  to  the  value  of  half,  or  less  than  half, 
that  amount  of  American  products  in  return;  and  this  un- 
favorable trade  balance  of  three  hundred  million  dollars  or 
more  which  accumulates  with  the  passing  of  each  year,  has 
to  be  made  up  by  the  sale  to  Great  Britain,  France,  Ger- 
many and  other  populous  countries  of  the  world,  where 
industrial  operations  are  carried  on  more  cheaply  than  in 
the  United  States,  of  raw  products  and  food-stuffs,  or  other 
commodities  into  which  the  element  of  labor  has  entered  to 
but  a  small  degree. 

Thus  American  cotton  goes  to  British  and  European  mills 
and  American  flour  and  meat  help  to  feed  the  operatives  of 
those  mills,  while  the  finished  products  of  the  same  mills 
and  factories  are  sold  in  part  in  the  countries  from  which 
the  United  States  obtains  its  tropical  commodities,  so  that 
its  money  passes  through  the  hands  of  workers  in  two 
countries,  leaving  a  profit  in  each,  before  the  remainder  gets 
back  to  its  original  source. 

Such  a  condition,  existing  in  the  twentieth  century  and 
among  an  enlightened  race,  constitutes  a  paradox  in  econo- 
mics and  is  a  serious  reflection  on  the  intelligence  and  ability 
of  the  American  people  for,  although  in  years  past  it  might 
not  have  been  possible  to  avoid  this  enormous  drain,  today 
the  United  States  has  the  opportunity  and  the  means  to 
eliminate  the  unfavorable  features  of  this  commerce  and  to 


RECIPROCITY  45 

produce  in  its  own  territory  those  things  that  are  now  being 
brought  from  foreign  countries  at  such  tremendous  cost. 

In   order  to  emphasize  this  point  there  are  given  below 
some  examples  of  the  commerce  of  the  United  States  with 
the   countries    contributing   the   greater   part   of  the   articles 
on  the  list  of  imports  already  shown: 
Fiscal    Year   1910 

Commerce  of  the  U.  S.  Imports  Exports  Balance 

with  from  to         against  U.  S. 

Brazil      $108, 154,491  $22,897,890  $85,256,601 

Cuba     122,528,037  52,858,758  69,669,279 

British    East    Indies     70,748,613  9,495,016  61,253,597 

Japan      66,398,761  21,959,310  44,439,451 

China     31,297,928  16,970,453  14,327,475 


Total      $399,127,830     $124,181,427       $274,946,403 

There  is  available  evidence  in  abundance — evidence  that 
is  proof  absolute — to  show  that  this  stupendous  outlay  is 
unnecessary,  that  it  can  be  checked,  that  it  is  due  to  ignor- 
ance on  the  part  of  the  American  people  and  that  to  permit 
it  to  continue  is  tantamount  to  trading  on  obligations  to 
posterity. 

The  problem  involved  in  changing  the  sources  of  supply 
of  six  hundred  million  dollars  worth  of  products  to  where 
a  compensating  trade  in  American  goods  may  be  gained, 
although  a  tremendous  one,  is  not  impossible  of  solution 
and  the  opportunity  has  for  more  than  a  decade  past  been 
waiting  at  the  hand  of  the  legislator  and  business  man  of  the 
United  States. 

The  Philippine  Islands  were  acquired  in  1898  and  Civil 
Government,  through  the  Philippine  Commission  of  which 
President  Taft  was  the  first  head,  was  inaugurated  in  1901. 
For  an  entire  decade  Congress  through  its  civil  representa- 
tives has  exercised  absolute  control  over  the  affairs  of  the 
archipelago  and  it  is  not  indulging  in  hyperbole  to  say  that 
the  achievement  marking  these  ten  years  of  rule  have  been 
little  short  of  marvelous.  The  internal  improvements  that 
have  been  effected  and  the  improvement  that  has  taken 
place  in  the  condition  of  the  country  and  the  people  seem 
well  nigh  incredible  when  comparison  is  made  with  the 
state  of  affairs  that  existed  ten  years  ago. 


46  SELECTED  ARTICLES 

The  building  of  roads  and  bridges  in  all  sections  of  the 
islands  and  of  railroads  on  some  of  the  principal  ones  has 
facilitated  the  marketing  of  products  and  stimulated  a  gen- 
eral interchange  of  commerce  and  communication  among 
the  people,  thus  tending  to  weld  the  many  diversified  tribes 
into  a  more  homogeneous  whole. 

Facilities  for  inter-island  transportation  have  been  pro- 
vided where  before  none  existed  and  the  system  that  al- 
ready existed  has  been  immeasurably  improved  while  coasts 
and  waterways  have  been  charted  and  the  whole  safeguard- 
ed by  a  chain  of  lights  that  mark  the  rocks  and  shoals  and 
guide  the  mariners  safely  through  storms  and  the  vigils  of 
the  night. 

Harbors  have  been  dredged  and  protected  and  docks 
built  at  the  principal  ports  for  the  benefit  and  security  of 
commerce  by  sea. 

Public  buildings  of  a  permanent  character  have  been 
erected  in  nearly  every  provincial  center  and  in  many  other 
of  the  important  municipalities  as  well. 

Labor  has  been  assisted  and  protected  and  a  system  of 
virtual  peonage  that  had  existed  from  time  immemorial  has 
been  eradicated  with  the  result  that  the  laborer  now  is  better 
paid  and  is  free  to  seek  and  accept  employment  wherever 
he  will.  He  is  at  liberty  to  sell  his  product  in  the  best  mar- 
ket that  offers  and  there  is  a  more  general  and  more  equi- 
table division  of  the  country's  wealth  among  those  who  pro- 
duce it.  The  Filipino  today  enjoys  a  measure  of  practical 
self-government  far  beyond  anything  he  even  aspired  to 
under  the  dominion  of  Spain. 

A  comprehensive  system  of  education  has  been  instituted 
and  carried  out  and  is  continually  being  extended,  that  is 
affording  to  a  large  proportion  of  the  people  full  opportun- 
ity to  equip  themselves  for  the  battle  of  life  by  exercising 
their  abilities  and  developing  their  capacities,  while  upon  the 
rising  generation  it  has  conferred  the  great  boon  of  a  com- 
mon language.  And  the  theoretical  is  supplemented  by  a 
thorough  course  of  manual  training  that  is  inculcating  in 
the  mind  of  the  youth  an  understanding  of  the  value  and 


RECIPROCITY  47 

necessity  of  honest  labor,  and  respect  for  the  dignity  that 
attaches  to  it. 

Provision  has  been  made  for  occupation  of  the  rich 
public  lands  by  offering  to  every  citizen  a  homestead  with- 
out cost,  and  the  people  are  invited  and  urged  to  take  advan- 
tage of  this  opportunity  to  provide  themselves  with  a 
competence  thus  put  within  their  reach,  that  will  make  them 
as  individuals,  economically  independent. 

A  strong  and  permanent  fiscal  system  based  on  the  gold 
standard  has  been  inaugurated  and  maintained  to  the  great 
benefit  of  the  islands  and  their  commerce  supplanting,  as  it 
did,  the  unstable  and  fluctuating  silver  currency  of  former 
times  and  contributing  in  no  small  degree  to  a  marked  in- 
crease of  confidence  in  the  future  of  industry  and  commerce 
in  the  country. 

Insular  finances  have  been  put  on  a  solid,  substantial  basis; 
taxes  are  quite  moderate  being  but  one  and  one-half  per 
cent  on  the  assessed  value  of  real  estate  in  Manila  and 
seven-i-ijjhths  of  one  per  cent  in  all  provinces  outside  the 
capital  while  there  is  no  tax  on  personal  property.  Expen- 
ditures have  been  kept  within  receipts;  the  credit  of  the 
islands  is  first  class  and  they  cost  the  Washington  Govern- 
ment not  one  penny  beyond  the  increased  expense  of  main- 
taining United  States  troops  stationed  here  above  what  their 
maintenance  would  cost  at  home  and  the  cost  of  fortifications 
that  are  to  serve  as  a  means  of  permanent  defense. 

An  efficient  body  of  insular  military  police,  known  as 
the  Philippines  Constabulary,  officered  in  part  by  officers  of 
the  United  States  regular  army,  performs  its  functions  in  an 
admirable  manner,  affording  security  to  person  and  property 
and  proving  wholly  effective  in  maintaining  law  and  order 
throughout  the  provinces. 

The  Judiciary  of  the  islands  has  been  organized  on  a 
splendid  working  basis  and  includes  in  its  personnel  a  con- 
siderable contingent  of  Americans  as  well  as  some  of  the  best 
legal  and  judicial!  minds  to  be  found  among  the  Filipinos. 
It  commands  the  unqualified  respect  and  confidence  of  all 
classes  and  is  the  bulwark  of  the  local  government.  This 


48  SELECTED  ARTICLES 

branch  of  the  government  is  impressing  on  the  minds  of  the 
people  a  wholesome  regard  for  the  law  and  for  the  rights  of 
property  and  the  individual. 

Splendid  work  has  been  done  towards  improving  sanitary 
conditions  throughout  the  islands,  with  the  result  that  the 
dread  scourges,  small  pox,  bubonic  plague  and  cholera  have 
been  practically  eliminated  or  brought  under  safe  control 
and  the  people  are  gradually  learning  the  value  of  hygiene 
to  the  preservation  of  life  and  to  the  correction  of  social 
evils. 

The  past  year  has  witnessed  the  completion  in  Manila  of 
one  of  the  finest  hospitals  in  the  world ;  on  an  elaborate, 
modern  sewerage  system  and  the  making  over  of  the  water 
system  which  has  been  greatly  extended  and  enlarged,  the 
source  of  supply  now  being  in  the  mountains  in  a  watershed 
more  than  thirty  miles  distant  from  the  city.  Manila  today 
ranks  among  the  healthiest  cities  of  the  world. 

This  is,  in  part,  what  has  been  accomplished  under  Amer- 
ican Government  in  the  Philippines  and  it  constitutes  a 
record  of  achievement  that  challenges  the  admiration  of  the 
world.  The  people  of  the  United  States  may  justly  be  proud 
of  it  all  for  it  is  no  small  thing  to  have  effected  in  ten  short 
years  the  regeneration  of  eight  millions  of  an  alien  race  to 
whose  customs  and  language  we  came  entire  strangers. 

But  while  the  government  within  the  islands  has  done 
and  is  doing  so  much  for  the  uplift  of  the  Filipino  people  and 
internal  progress  generally,  the  Government  and  people  of  the 
United  States  are  neglecting  one  of  the  most  wonderful  oppor- 
tunities, if  not  the  greatest,  that  ever  has  been  offered  to  any 
nation  in  the  history  of  the  world. 

Fix  in  your  mind  a  picture  of  the  Pacific  Ocean!  On  the 
east  you  have  the  long  coast  line  of  the  mainland  with  the 
ports  of  San  Diego  and  Los  Angeles  at  the  lower  end,  San 
Francisco  in  the  center,  and  Portland  and  the  Puget  Sound 
cities  near  the  northern  border;  farther  north  the  line  is 
taken  up  by  Alaska,  which  extends  to  the  regions  of  the  pole, 
nearly  touching,  at  points,  the  Siberian  coast,  while  the  Aleu- 
tian Islands  stretch  out  a  chain  across  the  northern  sea 


RECIPROCITY  49 

that  reaches  close  to  the  peninsula  of  Kamchatka.  Down 
towards  South  America  is  the  zone  through  which  the  great 
canal  is  rapidly  being  cut.  and  the  fact  that  preparations  for 
its  fortification  are  already  under  way  is  sufficient  notice  to 
the  world  that  the  United  States  intends  to  dominate  it  com- 
pletely. Two  thousand  miles  off  the  coast  and  in  a  position 
that  makes  them  a  shield  to  the  mainland,  are  the  Hawaiian 
Islands,  well  named  the  crossroads  of  the  Pacific,  containing 
the  splendid  Pearl  Harbor  which  the  United  States  is  con- 
verting into  one  of  the  strongest  naval  stations  on  the  face 
of  the  globe.  Among  the  South  Sea  Islands,  east  of  Aus- 
tralia and  north  east  of  New  Zealand  on  a  line  with  Hawaii, 
the  United  States  has  a  naval  base  in  Samoa.  At  the  south- 
west, lying  in  between  the  China  Sea  and  the  Pacific  Ocean, 
extending  from  the  Japanese  Island  of  Formosa  and  the 
coast  of  China  south  to  Borneo  and  the  Dutch  Celebes,  in  a 
position  commanding  completely  the  paths  of  commerce  be- 
tween Europe  and  the  Far  East  on  one  hand,  and  Australia 
and  the  Far  East  on  the  other  are  the  Philippines,  complet- 
ing, as  it  were,  a  circle  around  the  vast  Pacific  Ocean,  the 
theater  of  the  next  great  development  of  the  commerce  of 
the  world  and  the  principal  scene  of  the  future  activities  of 
mankind.  But  it  is  the  material  value  of  these  islands  rather 
than  their  strategic  importance  that  it  is  my  desire  to  discuss 
here. 

I  have  quoted  a  list  of  the  commodities  imported  by  the 
United  States  in  1910,  that  comprise  the  bulk  of  the  articles 
purchased  from  tropical  and  sub-tropical  countries.  You 
have  seen  by  figures  from  an  authoritative  source,  that  in 
it-  commerce  with  countries  supplying  the  annual  require- 
ments of  such  products,  which  now  amount  in  value  to  six 
hundred  million  dollars  or  more  and  is  rapidly  increasing, 
the  United  States  suffers  a  loss  of  at  least  half  that  figure. 
The  nation  is  thus  under  a  drain  of  three  hundred  million 
dollars  each  year,  through  having  to  buy  these  products 
from  countries  whose  trade  it  can  not  control  nor  gain  any 
advantage  whatever  in,  although  it  is  their  best  customer. 
It  is  obvious  that  if  the  United  States  were  producing  these 


50  SELECTED  ARTICLES 

things  in  its  own  territory  such  a  balance  could  not  exist 
against  it  for  there  would  be  available  a  compensating  trade 
subject  to  its  control.  It  would  then  be  in  a  position  to  ef- 
fect an  exchange  of  its  manufactures  and  temperate  zone 
foodstuffs  for  the  tropical  products  required  by  its  people. 

In  the  list  comprising  nineteen  of  the  more  important  tropi- 
cal and  sub-tropical  commodities  imported  that  last  year  reached 
a  total  value  of  five  hundred  and  ninety-seven  million  dollars, 
there  are  none  that  the  Philippines  are  not  adapted  to  produce 
in  quantities  sufficient  to  meet  the  demands  of  the  United 
States  and,  too,  imthout  having  to  employ  hot  house  methods 
in  their  production. 

If  it  can  be  demonstrated  that  this  is  the  fact  and  not 
merely  idle  assertion,  it  surely  would  seem  the  part  of  wisdom 
for  the  government  at  Washington  to  use  every  legitimate 
means  to  stimulate  and  assist  industry  here  in  order  that  the 
resources  of  the  islands  may  be  developed  and  their  potential 
wealth)  made  real.  But  what  is  the  condition  today?  Of 
those  nineteen  groups  or  classes  of  articles  numerated,  there 
are  but  two  on  which  a  duty  is  levied  in  the  United  States. 
Thus  the  Philippine  Islands  realize  no  benefit  whatever  with 
respect  to  them  by  reason  of  having  free  access  to  United 
States  markets  except  in  the  case  of  sugar  and  tobacco,  and 
in  these  there  is  an  unnecessary  limitation  on  the  quantity 
that  may  enter  in  any  one  year  without  payment  of  duty. 

The  element  now  lacking  that  is  essential  to  material  and 
large  development  here  is  capital.  We  have  the  land,  the 
labor  and  the  climate,  but  the  masses  are  devoid  of  initia- 
tive and  we  are  deficient  in  the  means  with  which  to  carry 
large  enterprise  into  effect.  Furnished  the  capital  necessary 
to  development,  the  islands'  production  of  marketable  com- 
modities would  increase  by  leaps  and  bounds. 

If  there  were  a  duty  in  the  United  States  on  the  various 
articles  I  have  mentioned,  which  are  now  required  there  for 
consumption  in  such  enormous  quantities,  a  special  incentive 
would  be  furnished  for  their  production  in  the  Philippines  as, 
having  free  access  to  the  markets  there,  these  islands  would 
offer  a  more  favorable  field  for  their  production  than  any 


RECIPROCITY  51 

country  not  having  similar  trade  relations.  Capital — especial- 
ly American  capital— would  thus  be  diverted  from  other  fields 
and  attracted  towards  us,  for  it  would  be  more  profitable  to 
grow  rubber,  and  coffee,  and  cacao,  and  silk,  and  spices,  and 
all  of  the  rest  of  the  articles  on  the  list,  in  the  Philippines 
than  in  other  countries. 

In  order  to  illustrate  this  point  more  clearly  we  can  use 
rubber  as  an  example.  At  the  present  time  there  is  a  tre- 
mendous amount  of  American  capital  invested  in  the  rubber 
industry  in  Brazil,  Mexico,  various  parts  of  Africa  and 
Straits  Settlements.  The  great  increase  in  the  world's  de- 
mand for  rubber,  occasioned  largely  by  the  sudden  develop- 
ment of  the  automobile  industry,  naturally  tended  to  strength- 
en the  price  and  make  rubber  growing  extremely  attractive 
to  capital.  And  the  United  States  has  developed  into  the 
greatest  consumer  of  rubber  among  the  nations. 

Now,  there  is  no  country  better  adapted  than  the  Philip- 
pines to  the  growth  of  the  rubber  tree.  It  has  been  demon- 
strated that  nearly  any  variety  will  flourish  in  the  various 
islands  of  the  archipelago.  But  there  being  no  duty  in  the 
United  States  on  crude  rubber  there  is  no  special  advantage 
to  be  gained  by  engaging  in  the  industry  in  these  islands  be- 
yond what  there  would  be  in  other  rubber  producing  coun- 
tries where  soil  and  climatic  conditions  are  similar.  In  fact 
other  countries  have  an  advantage  over  us  in  the  prestige  of 
longer  experience  and  thus  are  better  known  to  capital  seek- 
ing investment  in  the  rubber  growing  industry. 

But  were  the  United  States  to  put  a  duty  on  rubber  (it 
need  not  be  a  large  duty  either,  in  order  to  accomplish  the 
end)  it  would  result  in  the  Philippines  immediately  becoming 
a  much  more  desirable  field  for  exploitation  of  the  rubber  in- 
dustry than  any  other  section  in  the  world.  The  practical 
effect  of  such  a  duty,  so  far  as  the  United  States  is  con- 
cerned, would  be  to  slightly  increase  the  cost  of  its  rubber 
over  the  world's  price,  but  by  stimulating  the  industry  in 
the  Philippines  to  the  point  'where  these  islands  would  supply 
the  rubber  it  uses,  it  would  create  a  new  market  for  its  own 
products  and  manufactures  that  would  equal  in  amount  the 


52  SELECTED  ARTICLES 

full  value  of  its  rubber  imports.  When  consideration  is  taken 
of  the  fact  that  such  importations  amounted  last  year  to  over 
one  hundred  and  six  million  dollars  and  that  at  the  present 
rate  of  increase  the  country  will  require  double  that  amount 
in  a  few  years  time,  the  magnitude  of  such  an  accomplish- 
ment becomes  apparent.  The  proposition  is  entirely  simple 
and  applies  with  equal  force  to  every  one  of  the  nineteen 
articles  enumerated  in  the  list. 

These  statements  may  be  counted  absolute  facts:  The 
Philippines  will  consume  of  imported  commodities  what  they  are 
able  to  pay  for.  Their  purchasing  capacity  will  always  be 
measured  by  their  production  of  export  commodities.  There  is 
nothing  that  they  produce  or  are  adapted  to  produce  that  the 
United  States  is  not  at  present  under  the  necessity  of  buying 
from  foreign  countries  whose  import  trade  it  does  not  and  never 
will  control.  Thus  it  cannot  hope  for  advantages  in  other  fields 
yielding  tropical  products  that  it  already  possesses  in  these 
islands. 

It  is  morally  within  the  province  and  easily  within  the 
power  of  the  United  States  to  develop  the  natural  resources 
of  the  Philippines;  to  quicken  industry,  to  stimulate  produc- 
tive activity  and  to  assure  to  capital  and  properly  directed 
effort  actual,  tangible  results.  For  the  United  States  gov- 
ernment to  do  this  is  no  less  a  duty  owing  to  American 
posterity  than  it  is  to  the  eight  million  people  whose  destiny 
is  bound  up  with  its  own  and  who  are  politically  and  eco- 
nomically dependent  upon  it. 

It  is  full  time  that  the  government  and  the,  people  of  the 
United  States  realized  their  responsibilities  towards  the  Phil- 
ippine Islands  and  awakened  to  the  opportunities  that  await 
them  here. 

That  the  reader  may  better  understand  the  immediate 
value  of  the  Philippines  both  as  a  market  and  source  of  sup- 
ply for  the  United  States  the  very  pertinent  example  of 
Porto  Rico  will  be  cited. 

The  island  of  Porto  Rico,  lying  but  a  short  distance  south 
of  the  mainland  of  the  United  States,  was  acquired  at  the 


RECIPROCITY  53 

same  time  as  the  Philippines.  But  as  early  as  1901,  legisla- 
tion was  enacted  by  Congress  establishing  definitely  and 
permanently  its  relation  to  the  home  country,  and  commerce 
between  the  island  and  the  mainland  was  freed  of  any  restric- 
tion or  encumbrance  whatsoever.  The  effect  of  this  new 
condition  was  immediate.  Industries  were  established  or  re- 
habilitated; remunerative  returns  were  awarded  to  labor,  and 
capital  was  offered  the  inducement  of  a  profitable  market 
for  the  products  of  industry  that  it  would  create  or  develop, 
with  the  result  that  money  began  to  flow  freely  into  the 
island.  Production  increased  and  with  it  came  in  corres- 
ponding measure  an  increase  in  the  requirements  of  the 
people.  For  the  year  ended  June  30,  1901,  the  external  com- 
merce of  Porto  Rico  amounted  to  $17,950,197.  For  the  cal- 
endar year  1906  it  had  grown  to  $50,166,676.  For  the  fiscal 
year  1910  it  amounted  to  $68,553,745. 

This  industrial  awakening  is  on  all  sides  plainly  in  evidence. 
Among  the  masses  of  the  population  many  before  went  naked; 
now  they  are  clothed;  those  who  before  were  clothed  now  are 
better  clothed.  All  have  better  food  and  where  before  rice 
composed  almost  the  sole  diet  of  the  proletariat  the  population 
is  now  able  to  afford  a  wholesome  variety.  There  was  im- 
ported in  1910  over  two  and  a  quarter  million  dollars  worth  of 
breadstuff's  from  the  United  States  alone,  composed  principally 
of  wheat  flour,  and  nearly  three  million  dollars  worth  of  meat 
and  dairy  products  besides  a  large  quantity  of  miscellaneous 
foodstuffs.  And  the  United  States  is  profited  by  this  develop- 
ment as  much  or  more  than  Porto  Rico  for  not  only  do  Ameri- 
can manufacturers  and  producers  gain  directly  by  the  increased 
commerce,  but  American  capital  is  receiving  the  cream  of  the 
profits  of  new  industries  and  of  old  ones  extended  and  enlarged. 
It  is,  in  fact,  an  addition  to  the  home  market  to  the  extent  of 
twenty-six  million  dollars  a  year,  for  that  is  the  amount  of 
the  actual  increase  provided  for  the  United  States  export  trade. 
And  at  the  same  time  the  United  States  is  not  spending  a 
single  dollar  for  Porto  Rican  products  that  it  would  not  have 
to  pay  to  a  foreign  country  for  the  same  products  were  they 


54  SELECTED  ARTICLES 

not  available  in  Porto  Rico,  in  which  case  it  would  receive 
no  returning  trade  to  compensate. 

Porto  Rico  is  a  small  island  and  quite  densely  populated. 
It  has  an  area  of  3435  square  miles  and  boasts  approximately 
one  million  inhabitants.  Its  soil,  climate,  and  population 
represent  its  resources.  It  has  practically  no  wealth  of  mine 
or  of  forest,  and  sugar,  coffee,  tobacco,  and  a  few  fruits  com- 
prise its  export  crops.  Sugar  is  the  most  important  of  these 
and  contributes  two-thirds  of  the  total;  but  so  large  a  per- 
centage of  the  sugar  land  area  is  already  under  cultivation 
that  future  development  will  necessarily  be  in  the  minor  pur- 
suits and  industries. 

This  sketch  of  conditions  in  Porto  Rico  and  of  the  experi- 
ence there  since  that  island  became  a  part  of  the  United 
State  is  introductory  to  the  larger  proposition  of  the  Philip- 
pines. As  against  Porto  Rico's  population  of  one  million 
these  islands  possess  eight  millions.  Hence  on  the  basis  of 
comparative  population  alone  we  should  be  able  to  produce 
within  a  very  few  years  eight  times  as  much  as  Porto  Rico 
in  which  event  the  external  commerce  of  the  Philippines 
would  amount  to  five  hundred  and  fifty  million  dollars  an- 
nually. It  is  now  less  than  eighty  miilions.  But  the  area  of 
the  Philippines  is  125,924  square  miles  against  3.435  square 
miles  in  Porto  Rico,  making  their  possibilities  of  production 
on  this  basis  thirty-six  times  that  of  Porto  Rico.  There  can 
be  no  doubt  but  that  the  soil -of  the  Philippines  is  as  rich  as 
is  that  of  Porto  Rico  while  there  exist  here  many  reservoirs 
of  natural  wealth  in  forests  of  rare  woods  and  stores  of 
precious  metal,  that  give  great  promise  of  abundant  riches. 
We  have,  too,  a  list  of  products  so  much  greater  in  variety 
than  that  possessed  by  Porto  Rico  that  here  industry,  by 
reason  of  its  many  diverse  elements,  is  certain  to  be  more 
stable  and  less  variable  in  its  growth  than  where  its  pursuits 
are  restricted  as  to  number. 

Another  feature  that  is  of  the  deepest  significance  with 
respect  to  American  trade  in  the  Far  East  is  the  commanding 
position  occupied  by  Manila  as  a  distributing  center. 

The  proposition  of  control  by  the  United   States  of  the 


RECIPROCITY  55 

trade  of  China  through  development  of  the  resources  and 
control  of  the  trade  of  the  Philippines,  is  entirely  logical 
and  should  appeal  to  the  reason  of  every  practical  person. 

As  business  in  these  islands  increases  with  the  growth  of 
industry,  and  the  people  attain  a  consuming  capacity  con- 
sonant with  their  capacity  to  produce,  the  requirements  of 
this  market,  which  the  United  States  will  undoubtedly  con- 
trol, will  necessitate  the  carrying  of  permanent  stocks  in 
Manila  which  also  can  be  drawn  upon  to  supply  the  trade  of 
China.  United  States  manufacturers  will  then  have  an  ad- 
vantage in  the  competition  for  the  Chinese  trade  that  cannot 
be  secured  by  those  of  other  countries  for  the  reason  that 
no  European  country  has  a  base  in  the  Orient  with  contigu- 
ous territory  of  any  considerable  extent  whose  trade  it  can 
be  assured  of  in  a  measure  that  will  warrant  it  in  carrying 
stocks  to  supply.  The  great  ports  of  China  are  but  a  few 
days  voyage  from  Manila,  and  with  stocks  here  upon  which 
to  draw.  American  goods  would  be  made  available  to  mer- 
chants of  China  as  readily  as  they  now  are  to  dealers  in  the 
United  States  itself. 

Under  the  present  status  of  trade  in  China  several  months 
imist  pass  from  the  time  goods  are  ordered  in  Europe  or 
America  before  they  are  received.  Nearly  all  purchases  are 
made  through  brokers  by  Chinese  jobbers  and  distributors, 
for  future  delivery  and  the  elements  that  determine  the 
source  of  supply  are  the  daily  price  and  rate  of  exchange. 
But  the  long  period  of  time  intervening  between  the  date  of 
purchase  of  goods  and  their  delivery  injects  into  business  a 
very  serious  element  of  hazard,  besides  involving  the  invest- 
ment of  an  unusual  amount  of  capital  as  compared  with  the 
volume  of  business  transacted.  Now,  the  Chinese,  although 
pretty  tightly  wedded  to  custom,  are,  at  the  same  time, 
keen  business  men  and  quick  to  take  advantage  of  favorable 
opportunity.  It  would  not  be  long  ere  they  would  come  to 
see  the  advantage  of  buying  in  a  market  so  close  as  Manila 
even  at  a  slight  increase  in  original  cost  for  they  would 
realize  that  the  necessity  of  buying  heavily  and  carrying  ab- 
normal stocks  can  thereby  be  eliminated;  that  requirements 


56  SELECTED  ARTICLES 

can  be  more  accurately  anticipated  and  that  a  tremendous 
saving  can  be  effected  by  the  great  reduction  that  would 
result  in  the  amount  of  capital  necessary  to  conduct  their 
business.  I  firmly  believe  that  through  the  agency  of  the 
Philippines  the  United  States  will  come  to  control  the  trade 
of  China. 

And  China  is  a  big  market,  with  imports  already  ranging 
upwards  of  $300,000,000  annually.  And  she  is  destined  to 
grow  bigger  and  more  important  with  each  succeeding  year, 
for  she  is  developing  rapidly;  the  building  of  railroads  is 
giving  a  strong  impetus  to  industry  throughout  the  empire 
and  a  spirit  of  progress  prevails  there  that  is  bringing  that 
wonderful  country  and  its  people  into  more  intimate  relations, 
commercially  as  well  as  politically,  with  the  outside  world. 

American     Economic     Association.     Publications.    VII:  417. 

1892. 

Reciprocity  Treaty  with  Canada  of  1854.     F.  E.  Haynes. 

The  treaty  concluded  between  the  United  States  and 
Great  Britain  on  June  5,  1854,  was  designed  to  regulate  the 
commercial  relations  between  the  United  States  and  the 
British  possessions  in  North  America.  It  was  negotiated  at 
Washington  by  William  L.  Marcy,  Secretary  of  State  of  the 
United  States,  and  by  the  Earl  of  Elgin  and  Kincardine, 
Governor-General  of  the  North  American  provinces,  acting 
for  their  respective  governments. 

The  treaty  consisted  of  seven  articles,  of  which  the  first 
two  related  to  the  fisheries,  the  third  to  reciprocal  trade,  the 
fourth  to  the  navigation  of  the  St.  Lawrence,  the  fifth  to  the 
duration  and  abrogation  of  the  treaty,  the  sixth  to  the  ex- 
tension of  the  provisions  of  the  treaty  to  Newfoundland,  if 
that  colony  indicated  a  desire  for  such  extension,  and  the 
last  article  to  the  ratification  of  the  treaty. 

The  third  and  fourth  articles,  to  the  discussion  of  which 
I  intend  to  devote  this  paper,  are  as  follows: 

Art.    III.     It    is    agreed    that    the    articles    enumerated    in    the 


RECIPROCITY  57 

i 

schedule  hereunto  annexed,  being  the  growth  and  produce  of 
the  aforesaid  British  colonies,  or  of  the  United  States,  shall  be 
admitted  into  each  country  respectively  free  of  duty. 

Schedule 

<;rain,   flour  and  breadstuffs  of  all  kinds. 

Animals  of  all   kinds. 

Fresh,    smoked    and    salted    meats. 

Cotton-wool,    seeds    and    vegetables. 

Undried    fruits,    dried   fruits. 

Fish   of  all  kinds. 

Products  of  fish  and  all  other  creatures  living  in  the   water. 

Poultry,  eggs. 

Hides,   furs,  skins,   or  tails,   undressed. 

Stone,   or  marble,   in   its  crude   or   unwrought   state. 

Slate. 

Butter,  cheese  and  tallow. 

La  i-d,   horns,   manures. 

Ores  of  metals  of  all  kinds. 

Coal. 

I'itfh.   tar.    turpentine,  ashes. 

Timber  and  lumber  of  all  kinds,  round,  hewed  and  sawed, 
unmanufactured  in  whole  or  in  part. 

Firewood. 

Plants,   shrubs  and  trees. 

I  N-lts.   wool. 

Pish-on. 

Ki<  e,    broom-corn    an«l    bark. 

<Jypsum,    ground    or    unground. 

Hf\vn    01-   wrought  or  unwrought   burrs   of   grindstones. 
;n  ITs. 

Flax,  hemp  and  tow,  unmanufactured;  unmanufactured  to- 
bacco. 

Kags. 

Art.  IV.  It  is  agreed  that  the  citizens  and  inhabitants  of 
the  United  States  shall  have  the  right  to  navigate  the  river 
St.  Lawrence  and  the  canals  of  Canada,  used  as  the  means  of 
communication  between  the  Great  lakes  and  the  Atlantic  ocean, 
with  their  vessels,  boats  and  crafts,  as  fully  and  freely  as  the 
subjects  of  Her  Britannic  Majesty,  subject  only  to  the  same 
tolls  and  other  assessments  as  now  are,  or  may  hereafter  be, 
exacted  of  Her  Majesty's  said  subjects;  it  being  understood, 
however,  that  the  British  government  retains  the  right  of  sus- 
pending this  privilege  on  giving  due  notice  thereof  to  the  gov- 
ernment of  the  United  States. 

It  is  further  agreed  that  if  at  any  time  the  British  govern- 
ment should  exercise  the  said  reserved  right,  the  govern- 
ment of  the  United  States  shall  have  the  right  of  suspending, 
if  he  thinks  fit.  the  operation  of  Article  III  of  the  present  treaty, 
In  so  far  as  the  province  of  Canada  is  affected  thereby,  for  so 
long  as  the  suspension  of  the  free  navigation  of  the  river  St. 
Lawrence  or  the  canals  may  continue. 

It  is  further  agreed  that  British  subjects  shall  have  the  right 
freely  to  navigate  Lake  Michigan  with  their  vessels,  boats  and 
crafts  so  long  as  the  privilege  of  navigating  the  river  St.  Law- 
rence, secured  to  American  citizens  by  the  above  clause  of  the 
present  article  shall  continue;  and  the  government  of  the  United 
States  further  engages  to  urge  upon  the  state  governments  to 
secure  to  the  subjects  of  Her  Britannic  Majesty  the  use  of  the 


58  SELECTED  ARTICLES 

• 

several    state    canals    on    terms    of    equality    with    the    inhabitants 
of   the    United    States. 

And  it  is  further  agreed  that  no  export  duty,  or  other  duty, 
shall  be  levied-  on  lumber  or  timber  of  any  kind  cut  on  that 
portion  of  the  American  territory  in  the  state  of  Maine,  watered 
by  the  river  St.  John  and  its  tributaries,  and  floated  down  that 
river  to  the  sea,  when  the  same  is  shipped  to  the  United  States 
from  the  province  of  New  Brunswick. 

History  of  the  Treaty 

Previously  to  1845  the  trade  between  the  United  States 
and  British  provinces  was  burdened  with  a  system  of  differ- 
ential duties  which  discriminated  against  foreign  importa- 
tions into  Canada  in  favor  of  British  to  such  an  extent  as  to 
prevent  any  extensive  trade. 

In  1845  the  British  government  changed  its  commercial 
policy  by  authorizing  the  Canadian  legislature  to  regulate 
its  own  tariff.  In  1847  the  Canadian  legislature  removed 
the  existing  differential  duties,  and  admitted  American  goods 
on  the  same  terms  as  those  imported  from  Great  Britain. 

This  change  of  policy  seems  to  have  been  the  result  of 
two  causes;  (i)  of  that  change  of  policy  in  England  which 
manifested  itself  in  the  abolition  of  the  Corn  laws  in  1846, 
and  in  the  repeal  of  the  Navigation  laws  in  1849;  and  (2) 
of  local  causes  in  Canada.  The  Canadian  rebellion  of  1838- 
39  was  the  result  of  the  long  continued  hostility  between 
the  English  in  LIpper  Canada  and  the  French  in  Lower 
Canada.  The  attempt  of  Pitt  in  1791  to  settle  the  dispute 
by  dividing  Canada  into  two  provinces  had  failed.  The  long 
pent-up  feeling  broke  out  in  open  rebellion  in  both  the 
provinces.  To  pacify  the  people  the  British  government  de- 
cided to  reunite  the  two  provinces  and  give  to  the  consoli- 
dated province  a  responsible  government  in  accordance  with 
the  recommendation  of  Lord  Durham's  report  of  1839.  This 
was  done  in  1840. 

The  constitutional  grievances  were,  however,  not  the 
only  ones.  The  people  of  Canada  saw,  with  increasing  dis- 
content, the  rapid  strides  of  the  United  States  in  wealth. 
They  longed  to  share  in  that  progress,  and  hence  the  desire 
of  annexation  began  to  be  felt.  Lord  Elgin,  the  governor- 
general  from  1847-1854,  recognized  the  conditions,  and 


RECIPROCITY  59 

through  his  efforts  the  Reciprocity  Treaty  of  1854  was  ne- 
gotiated, giving  to  the  people  some  of  the  advantages  pos- 
sessed by  their  more  fortunate  and  richer  neighbors. 

In  March,  1849.  Lord  Elgin  called  Lord  Grey's  attention 
to  the  subject: 

"There  has  been,"  he  writes,  "a  vast  deal  of  talk  about 
'annexation,'  as  is  unfortunately  always  the  case  here  when  there 
is  anything  to  agitate  the  public  mind.  ...  A  great  deal 
of  this  talk  is,  however,  bravado,  and  a  great  deal  the  mere 
product  of  thoughtlessness.  Undoubtedly  it  is  in  some  quar- 
ters the  utterance  of  very  serious  conviction;  and  if  England 
will  not  make  the  sacrifices  which  are  absolutely  necessary  to 
put  the  colonists  here  in  as  good  a  position  commercially  as 
the  citizens  of  the  States — in  order  to  which  free  navigation  and 
fffiin-nrui  tr<nl?  irith  the  states  are  indispensable — if  not  only  the 
organs  of  the  league,  but  those  of  the  government,  and  of  the 
Peel  party,  are  always  writing  as  if  it  were  an  admitted  fact 
that  colonies,  and  more  especially  Canada,  are  a  burden,  to  be 
endured  only  because  they  cannot  be  got  rid  of,  the  end  may 
be  nearer  than  we  wot  or." 

Again,  in  November  the  same  year,  he  writes: 
"But  if  things  remain  on  their  present  footing  in  this  respect, 
there  is  nothing  before  us  but  violent  agitation,  ending  in  con- 
vulsion or  annexation.  .  .  .  And  I  much  fear  that  no  meas- 
ure but  the  establishment  of  reciprocal  trade  between  Canada 
and  the  States,  or  the  imposition  of  a  duty  on  the  produce  of 
the  States  when  imported  into  England,  will  remove  it." 

Such  being  the  state  of  feeling  in  Canada  in  regard  to 
matters  of  trade,  the  address  of  the  Parliament  to  the  Queen, 
praying  that  the  prospective  changes  in  the  laws  regulating, 
the  admission  of  foreign  grain  into  the  British  markets 
might  be  made  with  some  reference  to  their  needs,  came  as 
a  natural  consequence.  This  address  also  contained  a  spe- 
cific request  for  the  opening  of  negotiations  with  the  United 
States  for  the  admission  of  the  products  of  either  country 
into  the  ports  of  the  other  upon  equal  terms.  This  address, 
made  on  May  12,  1846,  received  a  favorable  answer  on  June 
3.  1846.  and  thus  became  the  first  direct  step  in  the  negotia- 
tion of  the  reciprocity  treaty. 

Accordingly,  in  December,  1846,  the  British  minister, 
Mr.  Pakenham,  acting  under  instructions,  communicated 
with  the  Secretary  of  the  Treasury,  Robert  J.  Walker,  upon 
the  subject.  The  United  States  government  proved  to  be 
favorably  disposed  to  the  proposition  for  freer  trade  with 
Canada,  and  upon  consultation  it  was  decided  to  proceed 


60  SELECTED  ARTICLES 

by  means  of  concurrent  legislation  by  the  United  States  and 
Canada.  Steps  were  therefore  taken  for  the  completion  of 
this  plan. 

in  1847  the  Canadian  Parliament,  immediately  availing 
itself  of  the  power  conferred  upon  it  by  the  Imperial  gov- 
ernment, to  regulate  duties  on  the  products  both  of  foreign 
countries  and  of  the  mother  country,  the  duties  on  American 
manufactures  were  lowered  from  125/2  to  7^  per  cent.,  and 
those  on  British  manufactures  were  raised  from  $  to  7^>, 
thus  placing  the  United  States  on  an  equality  with  the  moth- 
er country. 

The  memorandum  of  the  Hon.  W.  H.  Merritt,  submitted 
to  the  United  States  in  the  summer  of  1849,  contains  a 
copy  of  an  act  of  the  Canadian  Parliament  "to  provide  for 
the  free  admission  of  certain  articles  of  the  growth  or  pro- 
duction of  the  United  States  of  America  into  Canada,  when- 
ever similar  articles,  the  growth  and  production  of  Canada, 
shall  be  admitted  without  duty  into  the  said  States." 

In  1848  a  bill  was  drawn  up  by  the  committee  on  com- 
merce of  the  House  of  Representatives,  and  strongly  recom- 
mended by  the  Secretary  of  the  Treasury.  This  bill  passed 
the  House  without  opposition  in  1848,  but  failed  to  receive 
the  attention  of  the  Senate  on  account  of  the  pressure  of 
other  business.  At  the  next  session  it  again  failed  to  be 
acted  upon  by  the  Senate  for  the  same  reason. 

In  January,  1850,  a  similar  bill  was  reported  by  the  com- 
mittee on  commerce,  and  recommitted  "with  a  view  to  pro- 
vide therein  for  the  free  navigation  of  the  river  St.  Law- 
rence, and  to  assimilate  the  same  to  the  bill  now  pending 
before  the  Senate  of  the  like  character."  The  committee  on 
commerce,  through  its  chairman,  Robert  M.  McLane,  re- 
quested the  Secretary  of  State  to  inform  it  upon  the  subject 
of  the  navigation  of  the  St.  Lawrence.  Secretary  Clayton, 
after  communication  with  the  British  minister,  informed  the 
committee  of  the  readiness  of  the  British  government  to 
concede  the  navigation  by  treaty.  The  introduction  of  this 
new  feature  seems  to  have  caused  the  first  consideration  of 
a  treaty  in  reference  to  the  pending  negotiations. 


RECIPROCITY  61 

Finally  at  the  next  session  the  subject  was  taken  up 
again  as  a  matter  of  legislation  by  the  introduction  in  the 
House  of  a  bill  for  reciprocity  of  trade  between  the  United 
States  and  Canada  and  for  the  free  navigation  by  American 
vessels  of  the  canals  and  waters  of  Canada.  Late  in  the 
session  the  matter  was  debated,  and  an  amendment  suggest- 
ed, which  provided  for  the  importation  of  American  manu- 
factures into  Canada  at  the  same  rates  as  those  at  which 
British  manufactures  were  imported. 

After  1851  no  serious  attempt  was  made  to  obtain  recipro- 
cal trade  by  means  of  concurrent  legislation.  There  were 
probably  two  principal  reasons  for  this  neglect,  (i)  the  dis- 
turbed political  condition  of  the  times,  and  (2)  the  situation 
in  regard  to  the  northeastern  fisheries,  arising  from  differ- 
ences in  interpretation  of  the  convention  of  1818. 

The  beginning  of  the  negotiations  in  regard  to  reciprocity 
has  arisen  from  the  discontent  in  Canada,  but  the  introduc- 
tion of  the  question  of  the  fisheries  interested  the  maritime 
provinces  exclusively.  In  this  way  the  negotiation  became 
extended  so  as  to  include  all  the  British  possessions  in 
North  America.  It  is  probable,  however,  that  without  the 
existence  of  the  fishery  problem,  the  maritime  provinces 
would  have  been  included  in  any  reciprocity  measure,  for  in 
1849  the  British  charge  d'affaires,  writing  to  the  Secretary  of 
State,  says  that  he  has  lately  received  an  instruction  direct- 
ing him,  with  the  concurrence  of  the  lieutenant  governor  of 
New  Brunswick,  to  negotiate  for  the  extension  of  reciprocity 
to  that  province  upon  the  same  conditions  for  which  it  may 
be  conceded  to  Canada. 

Just  at  the  end  of  the  session  of  Congress  in  1853,  Mr. 
Breckinridge  moved  for  the  suspension  of  the  rules  for  the 
introduction  of  the  resolution  requesting  the  President  "to 
arrange  by  treaty  the  questions  connected  with  the  fisheries 
on  the  coasts  of  British  North  America,  the  free  navigation 
of  the  St.  Lawrence  and  St.  John,  the  export  duty  on  Ameri- 
can lumber  in  the  province  of  New  Brunswick,  and  recipro- 
cal trade  with  the  British  North  American  colonies  on  the 
principles  of  liberal  commercial  intercourse." 


62  SELECTED  ARTICLES 

Finally  the  English  government  determined  to  send  the 
Earl  of  Elgin,  then  governor-general  of  Canada,  to  Wash- 
ington. The  party  on  leaving  England  consisted  only  of 
Lord  Elgin,  Mr.  Francis  Hincks,  then  prime  minister  of 
Canada,  Captain  Hamilton,  A.  D.  C,  and  Lawrence  Oli- 
phant,  private  secretary  of  Lord  Elgin;  but  at  New  York  it 
was  joined  by  Colonel  Bruce  and  one  or  two  Canadians, 
whose  advice  and  assistance  upon  commercial  questions  were 
needed. 

Upon  arriving  at  Washington  Lord  Elgin  announced  the 
object  of  his  visit  to  President  Pierce  and  the  Secretary  of 
State,  M'r.  Marcy,  who  told  him  that  it  was  entirely  hope- 
less to  expect  that  such  a  treaty  as  he  proposed  could  be 
carried  through  with  the  opposition  which  existed  to  it  on 
the  part  of  the  Democrats,  who  had  a  majority  in  the  Sen- 
ate. They  assured  him,  however,  that  if  he  could  overcome 
this  opposition  he  would  find  no  difficulty  with  the  executive 
branch  of  the  government.  With  this  object  in  view,  the 
conversion  of  the  Democratic  majority  in  the  Senate.  "Lord 
Elgin  and  his  staff  approached  the  representatives  of  the 
American  nation  with  all  the  legitimate  wiles  of  accom- 
plished and  astute  diplomacy.  They  threw  themselves  into 
the  society  of  Washington  with  the  abandon  and  enjoyment 
of  a  group  of  visitors  solely  intent  on  pleasure."  "At  last, 
after  several  days  of  uninterrupted  festivity."  writes  Oli- 
phant,  "I  began  to  perceive  what  we  were  driving  at.  To 
make  quite  sure,  I  said  one  day  to  my  chief,  'I  find  all  my 
most  intimate  friends  are  Democratic  Senators.'  'So  do  I/ 
he  replied  dryly." 

In  a  letter  written  at  the  time  Oliphant  describes  more 
minutely  the  methods  used  by  Lord  Elgin  in  his  personal 
intercourse  with  those  whom  he  wished  to  bring  over  to  his 
side:  "Lord  Elgin  pretends  to  drink  immensely,  but  I 
watched  him,  and  I  don't  believe  he  drank  a  glass  between 
two  and  twelve.  He  is  the  most  thorough  diplomat  pos- 
sible,— never  loses  sight  for  a  moment  of  his  object,  and  while 
he  is  chaffing  Yankees  and  slapping  them  on  the  back,  he  is 
systematically  pursuing  that  object.  The  consequence  is, 


RECIPROCITY  63 

he    is    the   most   popular    Englishman    that    ever    visited    the 
United  States." 

At  last,  after  about  ten  days  of  social  activity,  Lord 
Elgin  informed  Mr.  Marcy  that  if  the  government  was  pre- 
pared to  adhere  to  its  promises  to  conclude  a  reciprocity 
treaty  with  Canada,  he  could  assure  the  President  that  a 
majority  of  the  Senate  would  be  found  favorable  to  it.  "Mr. 
Marcy,"  says  Oliphant,  "could  scarcely  believe  his  ears,  and 
was  so  much  taken  aback  that  I  somewhat  doubted  the  de- 
sire to  make  the  treaty,  which  he  so  strongly  expressed  on 
the  occasion  of  Lord  Elgin's  first  interview  with  him,  when 
he  also  pronounced  it  hopeless."  The  next  three  days  were 
occupied  with  the  arrangement  of  the  details  of  the  treaty, 
which  had  to  be  hurried  through  as  Lord  Elgin  was  due  at 
the  seat  of  his  government. 

"We  are  tremendously  triumphant;  we  have  signed  a  stun- 
ning treaty.  When  I  say  we,  it  was  in  the  dead  of  night,  in 
the  last  five  minutes  of  the  fifth  of  June,  and  the  first  five 
minutes  of  the  sixth  day  of  the  month  aforesaid,  that  in  a 
spacious  chamber,  by  the  brilliant  light  of  six  wax  candles  and 
;m  Around,  four  individuals  might  have  been  observed  seated, 
thtir  faces  expressive  of  deep  and  earnest  thought  not  unmixed 
with  cunning.  Their  feelings,  however,  to  the  acute  observer, 
manifested  themselves  in  different  ways;  and  this  was  but  nat- 
ural, as  two  were  young  and  two  aged, —one,  indeed,  far  gone 
in  years,  the  other  prematurely  so.  He  it  is  whose  measured 
tones  alone  break  the  solemn  silence  of  midnight,  except  when 
one  of  the  younger  auditors,  who  are  intently  poring  over  volum- 
inous MSS..  interrupts  him  to  interpolate  'and'  or  scratch  out 
'the'.  Thi-v  are,  in  fact,  checking  him,  and  the  aged  man  lis- 
tens while  he  picks  his  teeth  with  a  pair  of  scissors,  or  clears; 
out  the  wic-k  of  the  candles  with  their  points  and  wipes  them 
<m  his  hair.  He  may  occasionally  be  observed  to  wink  either 
from  conscious  'cuteness  or  unconscious  drowsiness.  Attached 
to  these  three  MSS.  by  red  ribbons  are  the  heavy  seals.  Pres- 
ently the  clock  strikes  twelve,  and  there  is  a  doubt  whether 
i"  date  it  to-day  or  yesterday.  For  a  moment  there  is  a  solemn 
silence,  and  he  who  was  reading  takes  the  pen,  which  has 
previously  been  impressively  dipped  in  the  ink  by  the  most 
intelligent  of  the  young  men,  who  appears  to  be  his  secretary, 
and  who  keeps  his  eyes  wearily  upon  the  other  young  man,  who 
is  the  opposition  secretary,  and  interesting  as  a  specimen  of 
a  Yankeo  in  that  capacity.  There  is  something  strongly  mys- 
terious in  the  scratching  of  that  midnight  pen,  for  it  is  scratch- 
ing away  the  destinies  of  nations;  and  then  it  is  placed  in 
the  hands  of  the  venerable  file,  whose  hand  does  not  shake, 
though  he  is  very  old,  and  knows  he  will  be  bullied  to  death 
by  half  the  members  of  Congress.  The  hand  that  has  used  a 
revolver  upon  previous  occasions  does  not  waver  with  a  pen, 
though  the  lines  he  traces  may  be  an  involver  of  a  revolver 
,-igain.  He  is  now  the  Secretary  of  State;  before  that,  a  gen- 
eral in  the  army;  before  that,  a  governor  of  a  state;  before 


64  SELECTED  ARTICLES 

that,  Secretary  of  War;  before  that,  minister  to  Mexico;  before 
that,  a  member  of  the  House  of  Representatives;  before  that,  an 
adventurer;  before  that,  a  cabinet-maker.  So  why  should  the 
old  man  fear?  Has  he  not  survived  the  changes  and  chances 
of  more  different  sorts  of  lives  than  any  other  man?  and  is  he 
afraid  of  being  done  by  an  English  lord?  So  he  gives  us  his 
blessing,  and  we  leave  the  old  man  and  his  secretary  with 
our  treaty  in  our  pockets." 

In  this  rather  grandiloquent  style  Oliphant  described  the 
signing  of  the  treaty  in  a  letter  written  to  his  mother  upon 
June  /,  1854. 

Doubts  have  been  expressed  as  to  the  means  employed 
in  the  negotiation  of  the  treaty.  Enemies  of  Lord  Elgin  at 
home  and  in  the  provinces  said  that  it  was  bought  with 
British  gold.  American  opponents  of  the  treaty  declared 
that  it  was  "floated  through  on  champagne."  While  there 
is  no  reason  to  believe  that  open  bribery  was  used,  there 
does  appear  to  be  ample  evidence  Jhat  the  second  charge 
was  well  founded,  and  Lord  Elgin's  secretary  does  not 
hesitate  to  admit  its  substantial  truth,  for  he  says  in  his 
account  of  the  negotiations  that  "without  altogether  admit- 
ting this,  there  can  be  no  doubt  that  in  the  hands  of  a  skill- 
ful diplomatist  that  liquor  is  not  without  its  value." 

Although  the  means  used  in  the  negotiation  of  the  treaty 
were  not  such  as  to  reflect  credit  upon  those  engaged  in 
them  the  preceding  attempts  to  obtain  reciprocal  trade 
privileges  show  that  it  had  a  substantial  movement  behind  it 
and  was  not  merely  "floated  through  on  champagne."  An 
act  to  carry  the  treaty  into  effect  was  passed  by  Congress 
and  approved  by  the  President,  August  5,  1854.  This  act 
(Thirty-third  Congress,  First  Session,  Chapter  259,  1854), 
provided  that — 

"Whenever  the  President  of  the  United  States  shall  receive 
satisfactory  evidence  that  the  Imperial  Parliament  of  Great  Brit- 
ain and  the  provincial  Parliaments  of  Canada,  New  Brunswick, 
Nova  Scotia  and  Prince  Edward's  Island  have  passed  laws  on 
their  part  to  give  full  effect  to  the  provisions  of  the  treaty 
between  the  United  States  and  Great  Britain  ....  he  is 
hereby  authorized  to  issue  his  proclamation  declaring  that  he 
has  such  evidence,  and  thereupon,  from  the  date  of  such 
proclamation,"  the  provisions  of  the  treaty  should  take  effect. 

The  President  issued  his  proclamation  March  16,  1855. 
For  the   first   few  years   the  treaty   seems   to   have   been 
popular.     The     condition     of    the     country    remained    pros- 


RECIPROCITY  65 

perous.  In  1857,  however,  came  the  great  crisis  of  that  year, 
and  before  the  country  had  fairly  recovered  from  the  effects 
of  that  disturbance,  the  slavery  question  had  reached  such  a 
stage  that  war  alone  could  settle  it.  The  "irrepressible  con- 
flict" came  and  the  reciprocity  treaty  was  doomed.  As  we 
shall  see  later,  the  treaty  was  far  from  satisfactory,  even  to 
its  friends,  looking  at  it  from  a  purely  economic  point  of 
view.  But  it  would  never  have  been  abrogated  on  account 
of  its  defects,  for  those  could  have  been  remedied  by  negotia- 
tion. It  fell  a  victim  "to  the  anger  which  the  behavior  of  a 
party  in  England  had  excited  in  America."  Moreover,  there 
were  the  inevitable  commercial  disturbances  of  a- time  of 
war. 

One  slight  attempt  was  made  in  1858  to  extend  reci- 
procity; but  it  failed.  The  first  proposition,  made  May  18, 
proposed  to  place  certain  products  upon  a  footing  with  the 
articles  exempted  from  duty  under  the  reciprocity  treaty  of 
1854.  The  second  proposition  was  in  the  form  of  a  joint 
resolution  authorizing  the  President,  "whenever  he  shall  re- 
ceive satisfactory  information  that  hay  and  hops,  being  the 
products  of  the  United  States,  and  exported  thence  to  any 
of  the  British  North  American  provinces,  are  admitted  free 
of  duty,  to  issue  his  proclamation  declaring  hay  and  hops, 
the  products  of  those  provinces,  shall  be  admitted  free  of 
duty." 

In  March,  1860.  the  House  passed  a  resolution  requesting 
the  President  to  give  it  all  the  information  in  his  possession 
relative  to  the  working  of  the  treaty.  Particular  informa- 
tion was  requested  as  to  "Whether  the  provincial  govern- 
ment of  Canada  has  not,  through  its  legislature  violated  the 
spirit  of  said  treaty;  what  has  been  the  practical  effect  of 
the  third  clause  upon  the  interests  of  the  respective  coun- 
tries; what  measures,  if  any,  have  been  taken  to  procure  cor- 
rect information  touching  the  practical  operation  and  effect 
of  the  third  article  upon  the  interests  of  the  American  citi- 
zens, and  whether,  in  his  opinion,  the  third  article  could  not, 
with  advantage  to  American  interests,  be  either  amended  or 
rescinded." 


66  SELECTED  ARTICLES 

From  this  time  on  until  the  final  abrogation  of  the  treaty, 
it  remained  a  frequent  subject  of  controversy  between  the 
friends  and  opponents  of  the  reciprocity  policy.  Elaborate 
reports  were  made  from  time  to  time  by  the  committee  on 
commerce  of  the  House.  Of  these  reports  the  most  ex- 
haustive was  that  prepared  by  Elijah  Ward,  of  New  York, 
for  the  committee  on  commerce,  and  presented  to  the 
House  on  February  '5,  1862.  This  report  states  in  a  clear 
and  thorough  manner  the  position  of  the  friends  of  the 
treaty.  Mr.  Ward,  while  criticising  many  of  the  features  of 
the  treaty,  and  especially  referring  to  the  hostile  policy  of 
Canada  in  discriminating  against  American  vessels  using  its 
canals  under  the  provision  for  free  navigation,  believed  in 
the  general  soundness  of  the  policy  of  reciprocity,  and  ad- 
vocated a  revision  of  the  treaty. 

In  reply  to  this  report  the  Canadian  minister  of  finance 
made  a  defense  of  the  policy  of  his  province.  The  report 
took  up  in  detail  the  several  causes  of  dissatisfaction  men- 
tioned by  the  Americans. 

Besides  the  report  of  1862  and  the  Canadian  reply,  there 
was  a  brief  report  made  in  April,  1864,  from  the  committee 
on  commerce.  This  also  was  the  work  of  Mr.  Ward,  and 
really  formed  a  supplement  to  his  report  of  1862.  It  formed 
the  basis  of  the  final  struggle  in  the  House  over  the  abroga- 
tion of  the  treaty.  The  final  paragraph  recommended — 

"That  the  President  be  authorized  to  give  notice  to  the 
government  of  Great  Britain  that  it  is  the  intention  of  the  gov- 
ernment of  the  United  States  to  terminate  the  reciprocity  treaty 
made  with  Great  Britain  for  the  British  North  American  prov- 
inces. .  .  .  unless  a  new  convention  shall  be  concluded 
between  the  two  governments,  by  which  the  provisions  shall 
be  abrogated  or  so  modified  as  to  be  mutually  satisfactory  to 
both  governments;  and  that  the  President  be  also  authorized 
to  appoint  three  commissioners,  by  and  with  the  advice  and 
consent  of  the  Senate,  for  the  revision  of  the  treaty,  and  to 
confer  with  other  commissioners  duly  authorized  therefor,  when- 
ever it  shall  appear  to  be  the  wish  of  the  government  of  Great 
Britain  to  negotiate  a  new  treaty  between  the  two  governments 
and  the  people  of  both  countries,  based  upon  true  principles  of 
reciprocity,  and  for  the  removal  of  existing  difficulties." 

The  report  was  accompanied  by  a  joint  resolution  em- 
bodying the  substance  of  the  recommendations  of  the  com- 
mittee on  commerce.  This  joint  resolution  was  the  subject 


RECIPROCITY  67 

of  the  debate  in  the  House  upon  the  abrogation  of  the 
treaty  on  May  18-19  and  May  24-26.  In  this  debate  Mr. 
Ward  acted  as  the  leader  of  the  friends  of  the  treaty,  mak- 
ing two  able  speeches  in  its  favor,  at  the  opening  and  clos- 
ing of  the  debate  respectively.  He  was  supported  by  Isaac 
N.  Arnold  of  Illinois.  Thomas  D.  Eliot  of  Massachusetts, 
John  V.  L.  Pruyn  and  Thomas  T.  Davis  of  New  York,  Rufus 
P.  Spaulding  of  Ohio,  J.  C.  Allen  of  Illinois,  and  L.  D.  M. 
Sweat  of  Maine-.  Justin  S.  Morrill  of  Vermont  led  the  oppo- 
sition, assisted  by  Frederick  A.  Pike  of  Maine,  Francis  W. 
Kellogg  of  Michigan,  and  Portus  Baxter  of  Vermont.  The 
merits  of  the  debate  were  certainly  with  the  friends  of  the 
treaty,  for  the  opposition  contented  itself  with  denuncia- 
tion of  the  treaty,  and  with  invectives  against  the  unfriendly 
policy  of  Great  Britain. 

Mr.  Arnold,  of  Illinois,  offered  an  amendment  to  the 
resolution  proposed  by  the  committee  on  commerce.  This 
amendment  authorized  the  President  to  use  his  discretion 
in  abrogating  the  treaty  in  case  of  a  failure  in  the  negotia- 
tion of  a  revised  treaty  satisfactory  to  both  governments. 
Mr.  Morrill  of  Vermont  proposed  an  amendment  in  the 
nature  of  a  substitute  for  the  resolution  of  the  committee  on 
commerce.  This  provided  for  an  unconditional  abrogation  of 
the  treaty. 

On  May  26,  1864,  the  House  voted  upon  the  three  proposi- 
tions before  it.  Mr.  Arnold's  amendment  was  defeated  by 
a  vote  of  54  to  97.  Mr.  Merrill's  substitute  met  the  same 
fate  by  a  vote  of  74  to  82.  The  original  resolution  of  the 
committee  was  finally  postponed  to  the  second  Tuesday  in 
December  by  a  vote  of  77  to  72.  after  having  been  read  a 
third  time.  A  motion  to  lay  the  resolution  on  the  table 
failed  by  a  vote  of  73  to  76. 

On  December  13,  1864,  the  House  took  up  the  joint  reso- 
lution and  passed  it  by  a  vote  of  85  to  57,  forty  members  not 
voting.  A  good  deal  of  party  manoeuvering  preceded  the 
final  vote,  the  opposition  led  by  Mr.  Morrill  attempting  to 
substitute  a  resolution  for  unconditional  abrogation. 


68  SELECTED  ARTICLES 

The  second  great  debate  upon  the  resolution  occurred  in 
the  Senate  in  January,  1865. 

On  December  14,  1864,  the  Senate  received  the  resolution 
from  the  House  and  referred  it,  after  a  short  debate,  to  the 
committee  on  foreign  relations.  Senator  Grimes  of  Iowa 
moved  that  the  resolution  be  referred  to  the  committee  on 
commerce,  as  it  refers  to  commercial  relations  existing  be- 
tween this  country  and  the  provinces  of  Great  Britain."  In 
reply  Senator  Summer  said  that  "every  question  of  com- 
merce between  the  two  countries,  even  if  it  is  the  subject  of 
negotiation,  must  be  referred  to  the  committee  on  commerce, 
and  you  may  as  well  dismiss  your  committee  on  foreign 
relations."  Finally  the  resolution  was  referred  to  the  com- 
mittee on  foreign  affairs. 

This  action  of  the  Senate  indicates  the  way  in  which  the 
measure  was  to  be  considered.  Instead  of  treating  the  mat- 
ter as  one  of  commercial  relations,  the  Senate  proceeded  to 
act  upon  it  as  a  political  measure.  As  I  have  already  said. 
this  was  the  attitude  of  the  opponents  of  the  treaty  through 
out  the  whole  discussion. 

The  committee  on  foreign  relations,  through  Mr.  Sum- 
ner,  reported  an  amendment  to  the  original  resolution,  pro- 
viding for  the  unconditional  abrogation  of  the  treaty. 

The  debate  upon  the  amendment  lasted  through  the  two 
days,  January  11-12,  1865,  and  ended  with  the  passage  of  the 
measure  on  the  latter  day  by  a  vote  of  33  to  8. 

The  debate  was  long  and  thorough.  The  opposition  ex- 
celled in  the  brilliancy  of  its  speakers.  Charles  Sumner, 
John  Sherman,  Jacob  Collamer  and  Solomon  Foot  of  Ver- 
mont. Zachariah  Chandler  of  Michigan,  James  R.  Doolittle  of 
Wisconsin,  Nathan  A.  Farwell  of  Maine,  and  John  Conness 
of  California,  spoke  for  the  abrogation.  John  P.  Hale  of 
New  Hampshire,  Alexander  Ramsey  of  Minnesota,  Timothy 
O.  Howe  of  Wisconsin,  and  Thomas  A.  Hendricks  of  Indiana 
opposed  the  abrogation. 

The  prestige  of  distinguished  services  was  certainly  writh 
the  opposition,  but  the  strength  of  solid  argument  rested 


RECIPROCITY  69 

with  the  friends  of  the  treaty.  Said  Senator  John  P.  Hale, 
in  concluding  his  speech  in  favor  of  a  revision  of  the  treaty: 
"If  the  treaty  is  imperfect  and  needs  amendment,  that  (the 
proposed  amendment  for  revision)  is  the  true,  statesmanlike, 
Christian  way  of  annulling  it.  ...  But  if,  on  the  other  hand, 
smarting  as  we  now  are  under  what  we  believe  and  feel  to  be 
injustice  on  the  part  of  these  colonies,  we  resort  to  this  legisla- 
tion at  this  time,  in  this  hour,  under  such  impulses,  it  will  tend 
to  increase  and  intensify  all  the  bad  feelings  that  have  unhappily 
existed;  will,  in  fact,  retard,  if  not  render  utterly  impossible 
any  future  progress  in  the  line  of  reciprocity  between  these  two 
countries." 

A  brief  quotation  from  the  speech  of  an  opponent  will 
indicate  the  spirit  with  which  the  treaty  was  attacked.  Said 
Senator  Jacob  Collamer  of  Vermont. 

"I  acknowledge  that  I  have  some  prejudice  against  this  treaty. 
I  am  a  little  situated  as  my  old  neighbor  Judge  Chipman  was 
when  he  was  called  upon  to  testify  whether  a  certain  witness 
was  a  man  of  truth.  He  said  he  was  not.  He  was  then  asked, 
'Sir,  are  you  not  conscious  that  you  labor  under  a  prejudice 
against  that  man?'  He  answered,  'I  think  it  likely  that  I 
am,  I  have  detected  him  stealing  two  or  three  times.'  " 

Justice  to  the  opponents  of  the  treaty  requires  it  to  be 
said  that  the  quotation  just  cited  is  an  extreme  example  of 
the  opinions  of  that  party.  The  address  of  the  late  Hannibal 
Hamlin  before  the  commercial  convention  at  Detroit,  in 
July,  1865,  indicates  the  opinions  of  the  more  moderate 
opponents  of  the  treaty.  He  said: 

"I  was  educated  in  the  school  of  free  trade, — not  free  trade 
in  slices.  I  affirm  that  that  is  the  most  obnoxious  system  of 
legislation  that  can  be  devised  by  man.  I  am  for  free  trade. 
.  .  .  .  But  what  do  I  mean  by  free  trade?  Not  that  system 
which  selects  a  few  articles  and  makes  them  entirely  free,  ren- 
dering it  necessary  that  you  shall  impose  additional  revenue  upon 
other  articles  in  order  to  make  up  for  the  deficiency.  That  is 
free  trade  in  slices,  and  it  cannot  be  defended  upon  any  prin- 
ciple of  political  economy  ever  enunciated  by  any  man." 

On  January  16,  1865,  the  House  concurred  in  the  amend- 
ment of  the  Senate  to  the  joint  resolution.  The  resolution, 
as  finally  passed,  proposed  an  unconditional  abrogation  of 
the  treaty!  "as  it  is  no  longer  for  the  interests  of  the  United 
States  to  continue  the  same  in  force."  This  resolution  re- 
ceived the  approval  of  the  President,  January  18,  1865.  The 
treaty  terminated  March  17,  1866. 

Delegates  from  Canada,  New  Brunswick,  and  Nova  Scotia 
arrived  at  Washington  January  24,  1866,  and  remained  there 
until  February  6.  The  delegates  were  A.  J.  Gait,  minister 


70  SELECTED  ARTICLES 

of  finance,  and  W.  P.  Rowland,  postmaster-general,  repre- 
senting Canada;  A.  J.  Smith,  attorney  general  of  New  Bruns- 
wick, and  W.  A.  Henry,  attorney-general  of  Nova  Scotia. 
After  many  days  discussion  the  negotiations  terminated  un- 
successfully. 

The  unsuccessful  attempt  at  renewal  made  by  the  pro- 
vincial delegates  was  followed  by  an  equally  unsuccessful 
attempt  to  continue  a  semblance  of  reciprocity  by  means  of 
legislation.  During  the  last  week  in  February  a  bill  with 
such  an  object  in  view,  was  introduced  in  the  House  by  Mr. 
Justin  S.  Mbrrill,  chairman  of  the  committee  on  ways  and 
means,  and  was  debated  on  March  6,  7,  9,  12.  But  even  a 
bill,  which  offered  terms  that  could  only  be  called  reciprocal 
by  "political"  license,  had  no  chance  of  success  in  the  exist- 
ing state  of  opinion  in  Congress  and  in  the  country.  Mr. 
Morrill  set  the  keynote  of  the  debate  when  he  said  in  his 
speech  at  the  opening  of  the  discussion,  that  "the  treaty  was 
an  ill-omened  one  from  the  start,  having  been  first  extorted 
from  us  by  the  armed  raid  upon  our  fishermen  in  1852.  made 
by  the  combined  armaments  of  the  provinces,  and  led  on  by 
the  imperial  government;  and  secondly,  won  from  us  by  the 
delusion  that  favor  would  beget  fraternity.  We  are  too  old 
to  be  again  deluded,  and  being  quite  able  to  withstand  a  bite, 
we  shall  be  less  likely  to  yield  to  a  growl."  A  few  believed 
that  the  wiser  policy  was  to  cultivate  friendly  relations  with 
the  provinces,  but  the  majority  thought  otherwise,  and  the 
bill  failed  to  pass.  One  of  the  minority  said  during  the  de- 
bate that— 

"He  would  not  have  risen if  he  had  not  voted  last 

year,  with  others,  for  an  abrogation  of  the  reciprocity  treaty, 
and  if  he  did  not  see  now,  from  the  tendencies  and  sympathies 
of  the  House,  that  the  moment  the  bill  passed  from  the  hands 
of  the  committee  of  the  whole  it  would  receive  its  final  death 
blow.  He  did  not  believe  that  there  would  have  been  thirty  votes 
obtained  in  this  House  last  year  for  the  abrogation  of  the  reci- 
procity treaty  with  Canada,  but  for  the  explicit  understanding 
that  some  sort  of  reciprocity  in  trade  would  be  forthwith  re- 
established, either  through  the  treaty-making  power,  or  through 
the  legislative  power  of  the  government.  The  people  of  the 
United  States  were  ground  down  by  the  internal  revenue  taxation, 
and  he  had  not  felt  at  liberty  to  make  some  sort  of  bargain  with 
the  people  of  Canada,  that  whatever  our  internal  revenues  might 
be,  the  same  would  be  levied,  either  by  them  or  by  us,  on  our 


RECIPROCITY  71 

imports  from  them.  It  was  exclusively  on  that  understanding  that 
he  had  voted  for  the  abrogation  of  the  treaty.  And  he  now  saw 
in  the  additional  claims  of  those  who  represented  the  lumber 
interests,  and  the  coal  and  other  interests  of  the  country,  that 
advantage  was  to  be  taken  of  the  present  opportunity,  and  that 
never  again  were  wre  to  have  reciprocity  with  the  neighboring 
provinces.  ...  If  that  were  to  be  so,  he  never  should  regret 
any  vote  that  he  gave  in  his  life  as  he  would  regret  his  vote  of 
last  winter,  to  abrogate  the  treaty.  He  had  given  it  with  the 
understanding  that  it  should  be  substantially  renewed." 

Why  was  the  treaty  abrogated?  Charles  Francis  Adams, 
minister  to  Great  Britain,  wrote  February  2,  1865,  to  Secre- 
tary Seward  that  in  his  belief  "all  these  measures  (for  abro- 
gation) were  the  result  rather  of  a  strong  political  feeling 
than  of  any  commercial  considerations.  I  should  not  dis- 
guise the  fact  of  the  prevalence  of  great  irritation  in  con- 
sequence of  the  events  that  had  taken  place  in  Canada; 
neither  should  I  conceal  my  regret,  as  it  seemed  to  me  to 
be  one  of  the  cardinal  points  of  our  policy,  both  in  a  political 
and  commercial  sense,  to  maintain  the  most  friendly  rela- 
tions with  the  whole  population  along  our  northern  border." 

Senator  Wilson,  of  Massachusetts,  said  in  the  Senate, 
January  12,  1865: 

"When  this  treaty  was  negotiated  it  was  believed  to  be  for 
tht-  Keneral  interests  of  the  country,  and  in  Massachusetts  it  was 
especially  believed  to  be  for  our  fishing,  manufacturing,  commer- 
cial and  railroad  interests.  I  have  ever  been  in  favor  of  the 
treaty,  and  up  to  this  time  could  never  have  been  induced  to  vote 
against  it.  I  am  not  clear  now  that  it  is  not  for  the  interests  of 
the  state  I  in  part  represent  to  let  it  stand.  I  am  inclined  to 
think  it  is  for  our  interest  that  the  treaty  should  stand  as  it 
now  does.  For  the  interests  of  the  whole  country  I  am  of  the 
opinion  that  it  ought  to  be  modified  or  perhaps  abrogated." 

A  convention  composed  of  boards  of  trade  and  chambers 
of  commerce  of  the  United  States  and  British  North  Ameri- 
can provinces  met  at  Detroit  July  11-14,  1865,  by  invitation 
of  the  local  board  of  trade,  to  protest  against  the  abrupt 
termination  of  the  reciprocity  treaty.  This  convention  was 
composed  of  business  men  and  others,  representing  the  lead- 
ing commercial  bodies  of  the  country.  Representatives  were 
present  from  New  York,  Michigan,  Massachusetts,  Maine, 
Illinois.  Ohio,  Canada  (west),  Prince  Edward  Island,  Penn- 
sylvania, Nova  Scotia,  Canada  (east),  Wisconsin,  Minne- 
sota, Missouri,  New  Brunswick.  Among  these  were  Lyman 
Tremain,  John  V.  L.  Pruyn,  late  chancellor  of  the  Univer- 


72  SELECTED  ARTICLES 

sity  of  the  state  of  New  York,  and  Martin  Townsend,  of 
New  York;  Frederick  Farley,  afterward  president  of  the 
national  board  of  trade;  John  Welsh,  afterward  minister  to 
Great  Britain;  A.  G.  Cattell  and  William  Elder,  of  Penn- 
sylvania; Joseph  S.  Ropes,  James  E.  Converse  and  W.  W. 
Greenough,  of  Massachusetts;  Morrison  R.  Waite,  after- 
ward chief  justice  of  the  supreme  court  of  Ohio;  James  F. 
Joy,  of  Michigan,  and  others.  The  convention  came  "to 
substantial  unanimity  and  they  united  in  urging  upon  the 
government  at  Washington  the  great  importance  of  imme- 
diately opening  negotiations  with  the  British  government 
for  a  new  arrangement,  at  the  least  as  liberal  on  both  sides 
as  the  one  about  to  expire  had  been,  and  as  much  broader 
as  should  appear  practicable.  Their  action  was  approved 
by  every  board  of  trade  and  chamber  of  commerce  in  the 
country  taking  any  interest  in  the  matter;  it  was  disapproved, 
so  far  as  we  ever  heard,  by  none." 

And  yet  Mr.  Larned,  in  his  report  in  1871  declares  that 
the  treaty  was  "justly  abrogated  in  1866  with  the  very  gen- 
eral sanction  of  public  opinion  in  the  country."  Do  the  opin- 
ions of  a  minister  to  England,  of  a  senator  of  the  United 
States  and  of  a  convention  of  representative  business  men, 
count  for  nothing? 

The  Working  of  the  Treaty 

Of  the  effect  of  the  treaty  upon  the  commerce  of  the  two 
countries  Senator  Sumner  said  in  a  speech  delivered  in  the 
Senate  in  January,  1865,  in  favor  of  its  abrogation: 

"This  has  increased  immensely,  but  it  is  difficult  to  say  how 
much  of  this  increase  is  due  to  the  treaty  and  how  much  is  due 
to  the  natural  growth  of  population  and  the  facilities  of  trans- 
portation in  both  countries.  If  it  could  be  traced  exclusively,  or 
in  any  large  measure,  to  the  treaty,  it  would  be  an  element  not 
to  be  disregarded.  But  it  does  not  follow,  from  the  occurrence 
of  this  measure  after  the  treaty  that  it  is  on  account  of  the  treaty. 
Post  hoc  ergo  propter  hoc  is  too  loose  a  rule  for  our  government 
on  the  present  occasion." 

Before  beginning  a  discussion  of  the  effects  of  the  treaty 
three  points  must  be  insisted  upon,  (i)  In  a  discussion  based 
upon  statistics,  it  must  be  remembered  that  the  figures  used 


RECIPROCITY  73 

are  not  mathematically  accurate.  Therefore  conclusions 
drawn  from  them  are  subject  to  some  qualification,  although 
it  is  not  intended  to  deal  with  distinctions  so  fine  that  they 
are  likely  to  be  affected  by  occasional  inaccuracies  in  the 
details  of  the  statistics.  (2)  The  treaty  was  only  one  of  sev- 
eral causes  at  work  at  the  same  time  upon  the  commerce  of 
the  two  countries.  The  increase  of  population,  the  improve- 
ment in  the  means  of  transportation  through  the  building 
of  canals  and  railroads,  and  the  development  of  manufac- 
turing industries,  were  acting  upon  trade  as  never  before  in 
the  history  of  the  world.  (3)  The  working  of  the  treaty 
was  disturbed  by  two  economic  events,  the  crisis  of  1857  and 
the  civil  war  of  1861-65. 

In  sixty-four  years,  1821  to  1885,  the  total  trade  (exports 
and  imports  combined)  between  the  United  States  and  the 
British  provinces,  increased  from  $2,500,495  to  $88,214,020. 
The  trade  by  decades  has  been  as  follows: 

1821     $2,500,495         1861  $51,245,224 

1831 4,926,747         1871     59,727,723 

1841     8,624,750         1881     87,030,472 

1851     19,543,469 

The  increase  of  trade  by  decades  has  been  as  follows: 

1821-1831     $2,426,252         1851-1861     $31,701,755 

1831-1841     3,698,003         1861-1871     8,482,499 

1841-1851     10,918,719         1871-1881     27,302,749 

These  figures  show  that  the  trade  was  comparatively 
small  up  to  1840;  that  the  decade  from  1841-51  witnessed  the 
beginning  of  the  great  development  of  the  last  fifty  years; 
that  the  decade  from  1851  to  1861  was  marked  by  the  great- 
est increase  of  trade  which  has  taken  place  down  to  1881; 
and  that  the  decade  from  1861-71  saw  the  smallest  increase 
since  that  of  1831-41.  The  decade  1851-61  included  a  portion 
of  the  period  influenced  by  the  reciprocity  treaty,  while  that 
of  1861-71  covered  the  period  of  its  abrogation,  and  of  the 
disturbance  caused  by  the  Civil  war. 

For  the  twelve  years  of  the  continuance  of  the  treaty  the 
total  trade  year  by  year  was  as  follows: 

1855     .  $49,000,000         1861 $50,000,000 

]  856     57,000,000         1862     48,000,000 

1857      49,000,000         1863     46,000,000 

1858     37,000,000         1864     

1859         45,000,000         1865     60,000,000 

1860     48,000,000         1866     75,000,000 


74  SELECTED  ARTICLES 

These  figures  show  the  effect  of  the  treaty  very  clearly. 
The  total  trade  for  the  last  year  before  the  treaty  was  $34,- 
899,544.  while  for  the  first  year  of  the  treaty  it  was  $57,041,- 
594,  an  increase  of  $22,142,050  for  the  first  year  under  the 
treaty  compared  with  an  increase  of  $9,184,896  during  three 
years  (1850-53)  before  the  treaty.  Under  the  favorable  con- 
ditions furnished  by  the  reciprocity  treaty,  the  trade  in- 
creased more  than  twice  as  much  in  one  year  as  it  had  in 
three  years  without  the  treaty. 

This  increased  trade  continued  with  the  usual  fluctuations 
during  the  continuance  of  the  treaty: 

1858 $37,995,673 

Total    Trade  1860  49,444,195 

under    Treaty    of    1854  1862  48,888,897 

1865  60,533,561 

1844  $  8,181,618 

Total    Trade  1846      9,344,150 

before    the    Treaty  1848      12,029,122 

1850      16,788,141 

1867 $50,283,464 

Total    Trade  1868       48,905,613 

after   the    Treaty  1870       58,134,775 

1872       70,088,925 

1875  ,..$76,508,092 

Total    Trade  1877       75,732,919 

under    the    Treaty    of    1871  1879       69,677,055 

1882       103,976,742 

An  examination  of  the  preceding  figures  shows  that  the 
abrogation  of  the  treaty  did  not  seriously  disturb  the  amount 
of  trade.  At  least  the  effect  was  not  permanent;  for  the 
trade  had  begun  to  recover  before  the  negotiation  of  the 
treaty  of  1871.  Of  course  a  considerable  portion  of  this 
increase  may  have  been  due,  and  undoubtedly  was  due,  to 
the  natural  increase  of  business,  the  result  of  the  increase  of 
wealth  and  of  improvements  in  production  and  transporta- 
tion, but  is  it  likely  that  the  permanent  effects  of  the  treaty 
had  something  to  do  with  this  increase?  May  not  the  in- 
fluence of  the  treaty  have  developed  a  trade  which  continued 
after  its  expiration?  It  seems  probable  to  me,  and  if  true, 
gives  to  the  reciprocity  treaty  of  1854  an  importance  which 
has  never  been  recognized. 


RECIPROCITY  75 

Besides  the  effect  of  the  treaty,  as  shown  by  the  increase 
of  trade,  the  amount  of  the  imports  into  the  United  States 
for  1866  (the  last  year  of  the  operation  of  the  treaty),  $48,- 
528,628,  gives  ground  for  the  conjecture  that  this  unusually 
large  quantity  was  due  to  the  desire  of  business  men  to 
profit  as  much  as  possible  by  the  treaty.  There  are  two 
reasons  for  this  conjecture:  (i)  because  the  fiscal  year 
ending  June  30,  1866,  was  not  coincident  with  the  existence 
of  the  treaty,  which  terminated  March  17,  1866.  Consequent- 
ly this  excessive  importation  was  the  work  of  less  than  nine 
months.  (2)  This  amount  of  importation  was  not  again 
reached  until  1882,  when  $50,775,581  of  goods  were  imported 
from  the  Dominion  of  Canada. 

Mr.  Lamed,  in  his  "Report  on  Trade  with  the  British 
North  American  Provinces,"  says  that — 

"To  a  remarkable  extent  our  present  trade  with  the  provinces 
is  what  might  be  characterized  as  a  pure  commerce  of  con- 

•  ncc,  incident  merely  to  the  economical  distribution  of  prod- 
ucts which  are  common  to  both  countries.  We  exchange  with 
t'hem  almost  equal  quantities  of  the  cereals,  and  almost  equal 
quantities,  on  an  average  of  flour.  Except  so  far  as  concerns 
the  barley  that  we  buy  and  the  Indian  corn  that  we  sell  to  them 
this  trade  originates  on  neither  side  in  any  necessity,  but  is 
chiefly  a  matter  of  simple  convenience,  of  economy  in  carriage, 
or  of  diversification  in  the  qualities  of  grain.  Similarly  and  for 
the  like  reasons  we  exchange  with  them  about  equal  quantities 
of  coal.  We  sell  them  a  certain  quantity  of  hides  and  skins, 
and  buy  half  that  quantity  of  the  same  articles  back  from  them. 
On  the  other  hand,  they  sell  us  provisions  and  wool  and  buy 
our  provisions  and  wool  to  half  the  amount  in  return.  Not  less 
than  one-third,  probably,  of  the  trade  now  carried  on  between 
the  United  States  and  the  neighboring  provinces  is  of  that  char- 
acter, and  the  fact  that  it  is  kept  up  with  so  little  diminution, 
notwithstanding  the  imposition  of  duties  on  both  sides  of  the 
frontier,  is  significant  of  the  value  of  the  advantages  that  are 
found  in  it." 

This  "commerce  of  convenience"  is  natural  enough  when 
we  consider  the  geographical  relations  of  the  two  countries. 
The  British  provinces  are  by  nature  divided  into  groups 
bearing  a  closer  relation  to  adjacent  portions  of  the  United 
States  than  to  the  other  parts  of  the  British  possessions. 
The  maritime  provinces  are  more  intimately  connected  with 
the  neighboring  New  England  states  than  with  the  Cana- 
das,  Ontario  and  Quebec,  while  the  Canadas  in  their  turn 
find  their  easiest  communication  with  the  middle  states  of 


76  SELECTED  ARTICLES 

the  Union.  This  grouping  of  the  various  provinces  has  re- 
ceived still  greater  emphasis  by  the  rapid  development  of 
the  western  provinces  of  the  dominion,  a  development  hard- 
ly begun  at  the  time  of  the  reciprocity  treaty. 

The  same  reason  for  a  "commerce  of  convenience"  ap- 
pears when  we  examine  the  economic  relations  of  the  two 
countries.  On  this  point  Goldwin  Smith  says: 

"Let  any  one  scan  the  economical  map  of  the  North  American 
continent,  with  its  adjacent  waters,  mark  its  northern  zone 
abounding  in  minerals,  in  bituminous  coal,  in  lumber,  in  fish, 
as  well  as  in  special  farm  products,  brought  in  the  north  to 
hardier  perfection,  of  all  of  which  the  southern  people  have  need: 
then  let  him  look  to  its  southern  regions,  the  natural  products 
of  which,  as  well  as  the  manufactures  produced  in  its  wealthy 
centres  of  industry,  are  needed  by  the  people  of  the  northern 
zone;  he  will  see  that  the  continent  is  an  economic  whole,  and 
that  to  run  a  customs  line  athwart  it  and  try  to  sever  its  mem- 
bers from  each  other,  is  to  wage  a  desperate  war  against  na- 
ture.1" 

Furthermore  a  "commerce  of  convenience"  is  not  the 
only  necessary  commerce  between  the  United  States  and  the 
provinces.  The  maritime  provinces  have  lumber,  bituminous 
coal  and  fish  which  they  desire  to  sell,  and  New  England  is 
anxious  to  buy.  The  Canadas,  Ontario  and  Quebec,  pro- 
duce barley,  eggs,  and  other  farm  products;  horses,  cattle 
and  lumber,  for  the  sale  of  which  they  look  to  New  York 
and  other  neighboring  states.  All  the  provinces  want  to 
get  American  manufactures  as  well  as  the  products  of  a  more 
southerly  climate  in  return. 

The  argument  of  the  opponents  of  reciprocity,  that 
there  cannot  be  profitable  commerce  between  Canada  and 
the  United  States,  because  their  products  are  the  same,  is 
not  true.  The  United  States  includes  regions  and  produc- 
tions almost  tropical.  Canada  has  bituminous  coal,  which  is 
needed  in  parts  of  the  United  States,  and  an  abundance  of 
nickel,  of  which  there  is  but  little  in  the  United  States. 
Canada  has  a  vast  supply  of  lumber,  and  the  United  States 
needs  all  that  it  can  get.  Both  countries  produce  barley,  but 
the  Canadian  barley  is  the  best  for  making  beer. 

"High  as  the  tariff  wall  between  Canada  and  the  United 
States  is,  trade  has  climbed  over  it."  In  1889  the  trade  be- 
tween Canada  and  the  United  States  was  greater  than  that 


RECIPROCITY  77 

between  Canada  and  any  other  country,  and  nearly  as  great 
as  that  between  Canada  and  all  the  countries  in  the  world 
put  together. 

The  treaty  was  intended  to  provide  for  the  exchange  of 
natural  products  between  the  two  countries,  and  with  very 
few  exceptions  these  products  were  in  the  crudest  possible 
condition,  just  as  they  were  taken  from  the  field  or  forest, 
or  dug  from  the  soil,  or  obtained  from  the  sea.  They  were 
raw  materials  in  the  fullest  sense  of  the  word,  and  may  be 
grouped  under  five  heads:  products  of  the  mine,  of  the 
forest,  of  the  sea,  animal  products  and  agricultural  produce. 

Products  of  the  Mine. — 

Coal,  ores  of  metals  of  all  kinds;  stone  or  marble,  un- 
wrought;  grindstones,  wrought  and  unwrought;  slate;  gyp- 
sum, ground  and  unground. 

Products  of  the  Forest. — 

Timber  and  lumber,  round,  hewed,  sawed;  firewood;  pitch, 
tar  and  turpentine. 

Products  of  the  Sea. — 

Fish  and  fish  products. 

Animal  Products.— 

Animals  of  all  kinds;  meats,  fresh,  smoked,  salted;  hides, 
furs,  skins,  undressed;  poultry,  eggs,  butter,  cheese,  tallow, 
lard,  horse  manures,  pelts,  wool. 

-  \tjricultural  Products. — 

Grain,  flour  and  breadstuffs;  cotton-wool,  seeds  and 
vegetables;  dried  and  undried  fruits;  plants,  shrubs  and  trees; 
rice,  broom-corn  and  bark;  flax,  hemp  and  tow;  tobacco, 
unmanufactured. 

In  this  list  a  few  are  included  which  may,  perhaps,  not 
be  fairly  classed  as  raw  products.  For  instance,  flour, 
smoked  and  salted  meats,  dried  fruits;  timber  and  lumber, 
round,  hewn,  and  sawed.  But  these  form  a  small  number 
compared  with  the  total  number  provided  for  by  the  treaty. 

The  trade  for  the  ten  years,  1853-1863,  may  be  sum- 
marized as  follows: 


78  SELECTED  ARTICLES 

Products  of  the  Mine  (imported  into  United  States). — 

1853     $58,400 

1856     84,228 

1860 3i8,537 

1863    1.114.831 

Products   of  the  Forest. — 

1853    $2,589,898 

1856    3,345,284 

1860    4,019,278 

1863 3,679,559 

Products  of  the  Sea. — 

1853     $73,422 

1856  . . . , 140,948 

1860 185,873 

1863 . . 957,i66 

Animal  Products. — 

1853   $1.107,870 

1856 2,375,388 

1860  3,557,912 

1863   3,133,463 

Agricultural  Products. — 

1853   $4,949,576 

1856 1 1,864,836 

1860 10,013.799 

1863  7,005,826 

The  largest  imports  before  the  treaty  were  of  agricul- 
tural produce,  and  in  1863  they  remained  still  the  largest, 
having  also  made  the  largest  gain — about  three  millions — dur- 
ing the  decade.  The  second  place,  both  in  1853  and  in  1863, 
belonged  to  the  products  of  the  forest,  the  gain,  however, 
being  inferior  to  that  made  by  animal  products.  Animal 
products  occupied  the  third  place  at  the  beginning  and  the 
ending  of  the  period,  while  the  gain  was  superior  to  that 
made  by  the  products  of  the  forest.  The  fourth  and  fifth 
places  were  held  by  fish  products  and  the  products  of  the 
mine,  the  latter  displacing  the  former  between  1853  and 
1863. 


RECIPROCITY  79 

Turning  now  to  the  imports  from  the  United  States  into 
Canada,  we  have  the  following  figures: 

Products  of  the  Mine   (imported  into  Canada). — 

1853    $126,586 

1856  488,984 

1860   406,688 

1863  647,965 

Products  of  the  Forest. — 

1853    $66,620 

1856    302,904 

1860   137,392 

1863    134,281 

Prml  nets  of  the  Sea. — 

1853    $383,436 

1856     411,716 

i860    227,112 

1863     281,023 

.  I  niinal  Products. — 

1853    $570,587 

1856     2,896,838 

i860     1,679,912 

1863     3,050,294 

Agricultural  Products. — 

1853    $668,113 

1856      3,809,1 12 

i860      4,603,1 14 

1863      .v. 8,137,447 

As  is  the  case  of  the  United  States  imports,  the  largest 
item  in  the  Canadian  in  1853  was  that  of  agricultural  produce, 
and  this  proportion  remained  the  same  in  1863,  the  increase 
being  remarkable — about  seven  and  a-half  millions.  The 
second  place  was  held  by  animal  products,  both  at  the  be- 
ginning and  at  the  end  of  the  period,  the  gain  also  being 
next  in  amount  to  that  of  agricultural  produce.  Products  of 
the  sea  occupied  the  third  place  at  the  beginning,  but  had 
fallen  to  fourth  place  at  the  end,  with  the  additional  dis- 


8o 


SELECTED  ARTICLES 


grace  of  having  had  a  decrease  instead  of  a  gain  during  the 
ten  years.  Products  of  the  mine  rose  from  fourth  place  to 
third  from  1853-1863,  making  a  gain  in  amount  next  to  that 
of  animal  products.  Finally  products  of  the  forest  held  and 
retained  the  fifth  place. 

The  following  figures  show  the  amount  of  the  trade  in  a 
few  leading  articles: 

Animals    (imported  into  United  States.)  — 

Increase. 

1862  $1,532,957 

1865  5,503.3i8    $3,970,36i 

Barley. — 

1862  1,095,443 

1865  4,093,202    2,997,759 

Timber. — 

1862  2,526,658 

1865  4,515,626     1,988,968 

Oats.— 

1862  634,176 

1865  2,216,722    1,582,546 

Wool.— 

1862  569,839 

1865  1,527,275     957,436 

Meats. — 

1862  128,935 

1865  850,328      721,393 

Coal. — 

1862 614,556 

1865  / 1,210.004      595,448 

Grain,  all  kinds  (imported  into  Canada). — 
1858 2,078,464 

1863  5,062,610    3,984,146 

Meats. — 

1858  544,366 

1863  1,238,923      694,557 


RECIPROCITY 


81 


Coal.— 

1858  242,700 

1863  548,846     306,146 

Animals. — 

1858  240,186 

1863  520,835      280,649 

Hides.— 

1858  125.000 

1863  384,951      259,951 

Cheese. — 

1858  90,045 

1863  294,327      204,282 

Wool.— 

1858  11,101 

1863  208,858      197,757 

I:lour. — 

1858  750,58o 

1863     898,029  147,449 

These  figures  show  that  the  articles  of  first  importance 
on  the  side  of  the  United  States  were  those  of  animal  prod- 
ucts, and  barley,  timber,  oats,  wool,  meats  and  coal;  on  the 
side  of  Canada  grain  occupied  the  first  place,  followed  by 
meats,  coal,  animals,  hides,  cheese,  wool,  and  flour.  If  bar- 
ley and  oats  were  combined  in  the  United  States  imports -as 
they  are  in  the  Canadian  under  the  single  head  of  grain, 
they  would  take  the  first  place,  and  grain  would  then  be  the 
largest  import  into  both  countries.  Of  course  these  figures 
are  not  for  the  same  years  and  some  slight  allowance  must 
be  made  for  the  varying  conditions  of  the  two  periods. 
The  period  1858-1863  covers  only  a  part  of  the  war  period, 
while  the  years  1862-1865  are  wholly  included  in  that  period. 
As  was  said  at  the  beginning  of  the  discussion,  the  course  of 
trade  under  the  treaty  was  disturbed  by  two  great  economic 
events,  so  that  no  certain  inference  may  be  drawn  from  the 
actual  course  of  trade.  Moreover,  the  whole  period  of  the 


82  SELECTED  ARTICLES 

treaty  was  almost  too  short  to  allow  sound  conclusions  to  be 
drawn  from  the  figures  representing  its  progress. 

The  trade  between  the  United  States  and  the  other  Brit- 
ish provinces  from  1849-1863  can  be  summarized  as  follows: 
the   figures   are    taken    from   a   table   of   leading   exports   to 
British  provinces  other  than  Canada  from  1849-1863. 
Wheat.— 

1849   332,765 

1853    208,956 

1856   268,959 

1860     90,049 

1863    110,333 

Wheat  Flour. — 

1849    1,518,922 

1853     784,498 

1856     3,120,787 

1860    3,044,243 

1863    4,420,748 

Indian  Corn. — 

1849     •.  . .       126,791 

1853     105,404 

1856     136,774 

1860 85,915 

1863     131,552 

Meal,  Corn  and  Rye. — 

1849     625,691 

1853 135,040 

1856     631,959 

1860    206,881 

1863 286,238 

The  most  noticeable  features  in  these  figures  are  the  de- 
cline in  the  amount  of  exports  in  wheat,  corn  and  rye  meal, 
and  the  large  increase  in  wheat  flour.  The  population  of  the 
maritime  provinces  was  small  and  their  resources  were 
undeveloped.  New  England  had  not  yet  come  to  need  the 
raw  materials  of  which  the  provinces  possessed  an  abun- 


RECIPROCITY  83 

dance,  and  therefore  the  resources  were  not  developed  dur- 
ing the  continuance  of  the  treaty.  These  reasons  probably 
explain  to  a  considerable  extent  the  failure  of  the  treaty  to 
produce  a  greater  effect  upon  the  trade.  The  remarkable 
increase  in  the  export  of  wheat-flour  from  a  million  and  a- 
half  to  nearly  four  millions  and  a-half — may  be  explained  by 
the  fact  that  the  United  States  imported  wheat  and  re- 
exported  it  in  the  form  of  wheat-flour. 

The  following  figures  show  the  relative  amount  of  trade 
between  the  United  States  and  Canada,  and  between  the 
United  States  and  the  other  British  provinces: 

United  States  J:.vp(>rts. 

Other 

Canada.  Provinces. 

1850   4,285,470  1.358,992 

1853    5,278,116  2,272,602 

1856     17,488,197  3,822,224 

1860  ;8,86i,673  4,989,708 

1862    '.  15,253,152  4,046,843 

I'nitcd  States  Exports. 

Other 

Canada.      Provinces. 
1850 5,930,821         3,618,214 

1853    7,829,099  5,3",543 

1856  20,883,241  8,146,108 

1860   14,083,114  8.623,214 

1862    12,842,504  8,236,61 1 

The  proportion  of  trade  with  these  two  groups,  the  Cana- 
das  and  the  maritime  provinces,  Nova  Scotia,  New  Bruns- 
wick, Prince  Edward  Island  and  Newfoundland,  seems  to 
have  been  little  affected  by  the  treaty.  The  imports  from 
Canada  were  three  times  as  large  as  those  from  the  mari- 
time provinces  in  1850  and  in  1862.  The  exports,  too,  bore 
about  the  same  proportion  to  each  other  in  both  years,  those 


84  SELECTED  ARTICLES 

to  Canada  being  somewhat  less  than  twice  as  large  as  those 
to  the  maritime  provinces.  The  effect  of  the  treaty  ap- 
pears much  more  striking  in  the  Canada  trade  than  in  that 
to  the  maritime  provinces.  From  1853-1856  the  imports 
from  Canada  were  more  than  trebled,  while  those  from  the 
maritime  provinces  do  not  double.  The  exports  to  Canada 
during  the  same  period  nearly  treble,  while  those  to  the 
other  provinces  again  do  not  double.  The  total  trade  be- 
tween the  United  States  and  Canada  was  in — 

1853  13,107,215 

1856 , 38,371,438 

The  total  trade  between  the  United  States  and  the  mari- 
time provinces  was  in — 

1853   7,584,145 

1856   i i  ..968,332 

During  the  discussion  over  the  abrogation  of  the  treaty 
the  common  assertion  was  that  the  United  States  allowed 
the  principal  Canadian  exports  to  enter  free  of  duty,  while 
Canada,  on  the  other  hand,  imposed  a  duty  upon  exports  of 
manufactured  goods  of  the  United  States.  The  following 
figures  show  the  amounts  of  free  and  dutiable  goods  im- 
ported into  the  United  States  and  Canada  in  several  dif- 
ferent years  from  1850-1862: 

I'nitcd  States  Imports 

Free  Dutiable 

1850  $    787,599  $  4,856.863 

1853   1,418,250  6,132,468 

1856   20,488,697  821,724 

1860    23,180,971  690,411 

1862     18,770,737  529,258 


RECIPROCITY  85 

Canadian  Imports 

Free  Dutiable 

1850   $    791,128  $  5,803,732 

1853  1,125,565  10,656,582 

1856  9,933,586  12,770,923 

1860  8,746,799  8,526,230 

1862     19,044,374  6,128,783 

Of  the  United  States  imports  the  amount  of  free  im- 
portation increased  from  $787,599  in  1850  to  $23,180,971  in 
1860,  while  that  of  dutiable  goods  decreased  from  $6,132,468 
in  1853  to  $529,258  in  1862.  Of  Canadian  imports  the  free 
importations  increased  from  $791,128  in  1850  to  $19^044,374 
in  1862,  while  the  dutiable  goods  remained  about  the  same 
amounting  to  $5,803,732  in  1850  and  to  $6,128,783  in  1862. 
An  actual  increase  in  the  amount  of  dutiable  goods  oc- 
curred from  1853  to  1856.  The  figures  for  these  years  were 
as  follows: 

1853 $10,656,582 

1854  - 13,449,341 

1855     1 1,449,472 

1856     12,770,923 

The  amounts  gradually  declined,  until  in  1862  it  reached 
the  lowest  amount  of  the  twelve  years,  1851-1862  inclu- 
sive. The  large  amount  of  dutiable  goods  may  have  been 
the  result  of  the  better  trade  relations  established  between 
the  two  countries  by  the  treaty,  although  the  largest  amount 
of  dutiable  imports  during  the  period  1850-62  was  in  1854, 
the  year  before  the  treaty  went  into  operation.  The  amount 
of  dutiable  goods  imported  into  Canada,  on  the  other  hand, 
increased  absolutely,  although  the  amount  bore  a  smaller 
proportion  to  the  total  trade.  The  increase  in  free  goods 
was  about  the  same  in  both  countries,  except  for  the  years, 
1856  and  1860,  when  the  increase  of  United  States  imports 
was  much  greater  than  that  of  Canadian  imports. 

The    treaty    of    1854   applied    almost    exclusively    to    nat- 


86  SELECTED  ARTICLES 

ural  products,  leaving  manufactures  upon  the  same  founda- 
tions upon  which  they  had  rested  before  the  treaty.  Curi- 
ously enough,  however,  the  question  of  manufactures  played 
an  important  part  in  the  abrogation  of  the  treaty.  The 
one  really  serious  complaint  made  by  the  opponents  of 
the  treaty  against  it,  and  admitted  even  by  its  friends,  was 
the  violation  of  the  spirit  of  the  treaty  by  the  province  of 
Canada  by  the  increase  of  the  provincial  tariff  on  articles 
not  included  in  the  treaty. 

The  importance  of  this  action  of  Canada  will  be  under- 
stood when  it  is  remembered  that  the  population  of  Can- 
ada formed  the  largest  portion  of  the  population  of  the 
provinces,  being  2,500,000  out  of  a  total  of  3,253,000.  The 
Canadian  trade,  therefore,  formed  by  far  the  largest 
part  of  the  trade  of  the  British  provinces,  that  of  the  re- 
mainder, containing  only  about  700,000  inhabitants,  being 
relatively  unimportant.  With  these  other  provinces  there 
was  no  dissatisfaction  during  the  existence  of  the  treaty. 
Trade  with  them  was  a  local  matter  of  interest  only  to  the 
people  of  New  England.  Their  slow  development  had  not 
in  1860  made  clear  the  importance  of  their  natural  resour- 
ces. Hence  the  arguments  for  a  closer  union  with  the  mari- 
time provinces,  so  prevalent  to-day,  had  not  yet  made 
their  appearance. 

The  increase  of  the  Canadian  tariff  was  a  part  of  the 
same  policy  which  had  dictated  the  negotiation  of  the  reci- 
procity treaty,  a  policy  having  for  its  object  the  develop- 
ment of  the  resources  of  the  provinces.  To  carry  out  this 
policy  the  Canadian  government  embarked  on  a  system  of 
internal  improvement  destined  to  develop  their  resources. 
Canals  were  built  and  improved,  the  navigation  of  the  St. 
Lawrence  was  improved,  and  railroads  were  constructed. 
The  idea  of  the  government  seems  to  have  been  to  direct 
the  carrying  trade  of  the  new  western  states  of  the  Union 
from  the  railroads  and  canals  of  New  York  to  Canadian 
canals  and  railroads.  The  negotiation  of  the  reciprocity 
treaty  gave  a  favorable  opportunity  for  such  a  scheme. 

These    improvements   in    transportation   were   undertaken 


RECIPROCITY  87 

by  the  government  and  were  mainly  dependent  upon  sub- 
sidies and  municipal  bonds.  No  doubt  the  object  of  these 
works  was  as  much  political  as  commercial,  the  desire  of 
the  Canadian  statesmen  having  been  to  consolidate  the  sep- 
arate provinces  and  by  an  increase  in  the  material  wealth 
of  the  people  to  remove  all  discontent,  which  from  the 
situation  of  the  country,  so  easily  developed  into  a  desire 
for  annexation  to  the  United  States. 

Whatever  the  objects  of  the  Canadian  government,  such 
works  required  large  revenues  for  their  completion.  Some 
increase  of  taxation  became  necessary.  The  easier  method 
seemed  to  be  to  raise  the  tariff.  This  could  not  be  done 
in  the  case  of  those  articles  included  in  the  treaty,  but  could 
be  done  in  the  case  of  maunfactured  goods.  This  was 
done,  and  then  arose  the  grievance  of  which  the  Ameri- 
cans so  bitterly  complained.  From  year  to  year,  as  a 
greater  revenue  was  required,  a  higher  tariff  was  imposed 
to  the  increasing  disgust  of  the  American  manufacturer. 

The  yearly  changes  from  1855-1859  in  certain  articles 
were  as  follows: 

1855-       1856.        1857.       1858.        1859- 

Molasses     16%         n  n  18  30 

Sugar     (refined) .     32  28  25  26^         40 

Sugar     (other.)..     27^         20  i7l/2         21  30 

Boots    and    Shoes     i2l/2         14^         20  21  25 

Harness     12^         17  20  21  25 

Cotton    Goods...     i2l/2         13^/2         15  15  20 

Iron  Goods    i2]/2         i8l/2         15  16  .          20 

Silk    Goods    i2l/2         itf/2         15  17  20 

Wool   Goods    12^/2         14  15  18  20 

The  complaint  of  the  Americans  might  have  had  a 
doubtful  justification  before  the  outbreak  of  the  civil  war, 
while  the  tariff  of  1857  was  in  force.  It  could  have  none 
at  all  after  the  war  tariffs  came  into  existence.  Even  un- 
der the  tariff  of  1857,  the  tariff  rate  of  the  United  States 
upon  cotton  and  woollen  goods  was  24  per  cent.,  4  per  cent, 
higher  v  than  the  Canadian  duty  under  the  tariff  of  1859. 


88  SELECTED  ARTICLES 

But  the  justification  of  the  complaint  does  not  rest  with  the 
comparative  rate  of  duties.  No  formal  complaint  of  a  vio- 
lation of  the  treaty  was  made  by  either  party.  The  United 
States  claimed  that  the  treaty  was  made  with  the  under- 
standing that  the  tariff  of  Canada  would  remain  the  same 
as  it  had  been  at  the  conclusion  of  the  treaty.  But  no 
clause  to  such  an  effect  had  been  added  to  the  treaty,  and 
the  United  States  could  expect  only  a  strict  adhesion  to 
the  terms  of  the  treaty. 

The  following  figures  show  the  effect  of  the  higher 
Canadian  tariff  upon  the  exports  of  manufactures  from  the 
United  States: 

Cotton  Manufactures. — 

1858-59     $363,016 

1862-63     64495 

Iron  Manufactures. —   (except  Pig  Iron). 

1858-59 761,619 

1862-63     ; ,.    395,907 

Boots  and  Shoes. — 

1858-59 21 1,147 

1862-63     22,860 

Tobacco   (Manufactured). — 

1858-59    1,205,684 

1862-63     76,026 

House  Furniture. — 

1858-59 136,765 

1862-63     66,718 

Books. — 

1858-59     ,. 154,034 

1862-63     i 25,164 

Hats.— 

1858-59     116,150 

1862-63     14,078 

Musical  Instruments. — 

1858-59     104,534 

1862-63    67,445 


RECIPROCITY  89 

Unenumerated. — 

1858-59    $624,534 

1862-63    401,227 

These  figures  show  a  marked  decrease  in  the  exports  of 
American  manufactures  to  Canada  from  1858  to  1863.  Un- 
doubtedly the  increase  in  the  rate  of  the  Canadian  duties 
upon  manufactured  articles,  was  one  of  the  causes  of  this 
falling  off.  Yet  it  must  be  remembered  that  the  Civil  war 
broke  out  during  the  period,  and  that  the  effect  which  it 
produced  upon  the  export  of  manufactures  must  have  been 
considerable,  especially  in  the  case  of  the  cotton  manufac- 
tures. The  needs  of  the  United  States  increased,  while  its 
power  of  production  diminished.  This,  of  course,  applied  to 
all  branches  of  production. 

The  following  figures  show  the  total  amounts  of  the  ex- 
ports of  American  manufactures  to  Canada  for  the  several 
years  from  1858-1859  to  1862-1863. 

1858-59     : 4,185,516 

1859-60    3,548,114 

1860-61     3,501,642 

1861-62    2,596,930 

1862-63     1,510,802 

The  privilege  of  free  navigation  of  the  river  St.  Law- 
rence, conferred  by  the  fourth  article  of  the  treaty,  had  long 
been  a  subject  of  negotiation  between  the  United  States  and 
Great  Britain.  The  United  States  claimed  a  right  of  free 
navigation  as  "a  riparian  state  of  the  upper  waters  of  the 
river  and  of  the  lakes  which  feed  it."  This  privilege,  grant- 
ed temporarily  in  1854,  was  given  permanently  by  article 
XXVI  of  the  treaty  of  1871. 

Besides  the  privilege  of  navigating  the  St.  Lawrence, 
that  of  navigating  those  canals  of  Canada  which  formed  the 
means  of  communication  between  the  lakes  and  the  sea,  was 
granted  by  the  fourth  article  of  the  treaty.  This  privilege 
proved  a  bone  of  contention  between  the  two  countries. 

The  interest  of  the  United  States  in  the  navigation  of  the 


90  SELECTED  ARTICLES 

Canadian  canals  by  its  citizens  upon  the  same  terms  with 
Canadians  related  to  the  increasing  needs  of  means  of  trans- 
portation from  the  grain  producing  states  of  the  northwest 
to  the  sea-coast.  The  railroad  system  in  the  United  States 
was  still  in  the  early  stages  of  its  development,  the  great 
through  lines  between  the  interior  and  the  sea-coast  not 
being  completed  until  nearly  ten  years  after  the  period  of 
the  reciprocity  treaty.  Great  dependence  was  still  made 
upon  the  canal  system  of  the  country,  and  many  attempts 
were  made  for  the  improvement  of  the  existing  system. 
Doubtless,  too,  the  blockade  of  the  Mississippi  during  the 
Civil  war,  thus  cutting  off  one  means  of  transportation  to  the 
sea,  made  the  desire  for  any  other  possible  avenue  of  com- 
munication with  the  sea  stronger  than  it  would  otherwise 
have  been. 

The  inadequacy  of  the  existing  means  of  transportation 
led,  too,  to  a  natural  suspicion  on  the  part  of  the  producers 
of  western  grain  that  the  owners  of  railroads  and  canals 
would  use  them  for  the  furtherance  of  their  own  interests 
to  the  injury  of  the  helpless  producers.  Thus  early  ap- 
peared the  western  hostility  to  railroads,  which  later  in- 
fluenced the  legislation  of  many  states. 

Besides  the  western  producers,  anxious  for  a  new  av- 
enue for  the  transportation  of  their  products  to  market,  a 
certain  commercial  element  favored  the  continuance  of  free 
navigation,  hoping  thereby  to  profit  by  means  of  the  larger 
trade  which  would  be  brought  to  their  doors.  This  element 
seems  to  have  been  most  active  in  the  northern  parts  of 
New  York,  especially  in  Rochester,  Oswego  and  Ogdensburg. 
Their  expectation  seems  to  have  been  to  obtain  a  large 
share  of  the  business  of  transportation  from  the  west  to  the 
sea-coast.  The  course  would  naturally  be,  they  thought, 
from  the  lakes  through  the  Welland  canal  and  Lake  On- 
tario to  their  own  wharves.  Then  they  would  profit  greatly 
by  such  a  trade. 

But  the  interest  of  Canada  in  granting  the  privilege  of 
navigating  her  canals  to  foreigners  seems  to  have  been 
clearly  connected  with  the  policy  of  internal  development  to 


RECIPROCITY  91 

which  I  have  already  referred.  The  canals  were  built  for 
the  benefit  of  Canada,  and  the  grant  of  special  privileges  to 
Americans  was  expected  to  work  towards  that  end.  The 
diversion  of  a  large  part  of  the  carrying  trade  from  Ameri- 
can canals  and  railroads  would  be  a  great  gain  to  Canada  and 
would  surely  cause  such  an  increase  of  prosperity  that  all 
desire  for  annexation  would  die  out  of  the  minds  of  the 
people.  Unfortunately  the  laws  of  nature  were  unfavorable 
to  this  scheme.  For  a  good  portion  of  each  year  the  canals 
and  rivers  of  Canada  are  frozen  over,  and  consequently  this 
new  outlet  for  the  surplus  products  of  the  west  could  have 
only  a  limited  value.  The  attempt  to  thwart  the  laws  01 
nature  did  not  turn  out  as  the  projectors  expected. 

In  the  report  of  Hon.  W.  P.  Rowland,  finance  minister 
for  Canada  for  the  year  1862,  the  results  of  this  policy  are, 
examined.  He  says  that  "the  movement  of  property  on  the 
provincial  canals  shows  a  steady  increase." 

On  the  Welland  canal  the  movement  was: 

Tons  Property.     Tonnage  of  Vessels. 

1859  709,61 1  856,918 

1860    944,084  1,238,509 

1861  1,020,483  1,327,672 

1862   1,243,774  1,476,842 

On  the  St.  Lawrence  canals  the  movement  was: 

Tons  Property.  Tonnage  of  Vessels. 

1859   631,769  765,636 

1860   733,596  824,465 

1861    886,908  1,009,469 

1862  964,394  1,049,230 

In  1860  the  tolls  on  the  St.  Lawrence  canals  were  abol- 
ished and  those  on  the  Welland  canal  reduced. 

The  report  of  the  finance  minister  says  upon  this  point, 
that  though  there  has  been  an  increase  in  the  movement  of 
property  by  the  St.  Lawrence  route  since  the  change,  this 
increase  must  not  be  considered  as  due  entirely  to  the  re- 


92  SELECTED  ARTICLES 

mission  of  tolls.  "The  greatly  increased  production  of 
cereals  in  the  western  states  and  the  figures  presently  intro- 
duced will  show  that  in  proportion  to  that  increase,  and  to 
the  whole  volume  of  agricultural  produce  moved  from  Lakes 
Erie  and  Michigan  to  tide-water,  we  have  not  obtained  so 
large  a  traffic  since  the  removal  of  the  tolls  as  we  obtained 
prior  to  the  adoption  of  that  policy." 

While  the  Canadian  canals  failed  to  reap  the  benefits  ex- 
pected from  the  reduction  of  tolls,  the  Erie  canal  material- 
ly increased  its  tolls.  This  increase  amounted  to  an  advance 
of  seventy  cents  per  ton  on  wheat  and  flour  from  Buffalo  to 
tide-water,  and  of  forty  cents  per  ton  from  Oswego  to  tide- 
water. 

The  finance  minister  concludes  from  the  results  of  the 
free  canal  system  that  the  policy  has  been  productive  of 
benefit,  neither  to  the  producer  nor  to  the  consumer  of 
western  breadstuffs.  He  says  that  "it  can  be  shown  from 
trustworthy  data  that,  in  so  far  as  the  actual  cost  of  trans- 
portation is  concerned,  western  produce  can  be  carried  to 
tide-water  much  cheaper  by  the  St.  Lawrence  than  by  any 
competing  route."  The  cause  of  the  failure  of  Canadian 
canals  to  obtain  a  large  proportion  of  the  western  trade  is 
due,  in  the  opinion  of  the  minister,  to  "the  absence  of  suf- 
ficient competition  among  forwarders  engaged  in  the  St. 
Lawrence  trade,  to  the  financial  relations  between  shippers 
engaged  in  the  western  trade  and  the  capitalists  of  New 
York,  and  finally  and  chiefly,  to  the  lower  rates  of  freights 
from  New  York  to  Europe,  occasioned  by  the  greater  com- 
petition at  that  port  than  is  to  be  found  at  Quebec  or  Mon- 
treal. There  is  but  one  course  open  for  securing  that  quota 
of  the  western  trade  which  the  advantages  of  the  St.  Law- 
rence route  give  us  reason  to  anticipate.  If  we  can  give  to 
the  owners  of  the  largest  vessels  now  profitably  engaged  in 
the  trade  of  Lake  Michigan  the  option  of  trading  to  Kingston 
and  the  St.  Lawrence,  or  to  Buffalo,  as  may  be  found  most 
profitable,  we  shall  have  thrown  down  the  barrier  which  now 
forces  the  main  current  of  trade  into  the  Erie  canal.  We 
shall  have  more  than  balanced  the  greater  insurance  and 


RECIPROCITY  93 

freights  charged  from  our  seaports  to  Europe  over  the  cor- 
responding charges  from  New  York,  and  we  may  there- 
after expect  Quebec  and  Montreal  -to  take  rank  among 
the  greatst  grain  marts  of  this  continent." 

The  value  of  the  navigation  of  the  Canadian  canals  can, 
I  think,  be  safely  inferred  from  this  report  of  the  Canadian 
minister  of  finance.  Notwithstanding  the  importance  at- 
tached to  it  by  the  inhabitants  of  the  northwest,  the  results 
of  its  practical  use  for  a  series  of  years  were  unsatisfactory 
if  not  insignificant.  In  spite  of  every  effort  to  direct  the 
carrying  trade  from  the  Erie  canal  the  Canadian  canals  ob- 
tained only  a  small  fraction  of  the  total  trade,  and  this 
small  fraction  seemed  to  bear  a  smaller  and  smaller  propor- 
tion to  the  total  traffic  between  the  west  and  the  sea-coast. 

An  examination  of  the  history  and  effect  of  the  reciproc- 
ity treaty  of  1854  leads  to  the  conclusion  that  the  measure 
was  favorable  to  the  development  of  trade  between  the 
United  States  and  the  British  provinces.  The  statistics  of 
trade  indicate  a  greater  increase  of  commerce  during  the 
continuance  of  the  treaty  than  at  any  other  time  during  the 
period  from  1820-1880.  This  increase  appears  most  clearly 
during  the  early  years  of  the  treaty,  for  the  later  years  were 
disturbed  by  extraordinary  economic  events.  But  depen- 
dence must  not  be  had  exclusively  upon  statistics,  for  there 
were  features  of  the  trade  which  cannot  be  illustrated  by 
means  of  statistics.  The  "commerce  of  convenience"  and 
the  gain  to  both  countries,  and  especially  to  the  United 
States,  of  obtaining  raw  materials  free  of  duty  are  subjects 
incapable  of  statistical  illustration.  Imperfections  there  may 
have  been,  and  certainly  were,  as  was  most  natural  in  a  first 
attempt  at  a  settlement  of  trade  relations  on  a  new  basis. 
These  imperfections,  however,  were  not  the  cause  of  its 
abrogation.  The  cause  was  political  rather  than  economical 
or  commercial.  There  is  very  little  doubt,  as  has  been 
said  already,  that  the  attitude  of  the  English  towards  the 
North  during  the  Civil  war,  was  the  direct  cause  of  the  ab- 
rogation of  the  treaty.  The  evident  hostility  of  the  Eng- 
lish aroused  still  more  fully  all  the  dormant  resentment  of 


94  SELECTED  ARTICLES 

the  North,  stirred  as  it  was  already  by  the  southern  rebel- 
lion. In  such  a  state  of  feeling  the  result  of  any  discussion 
of  the  treaty  must  prove  fatal.  And  so  it  did.  The  contro- 
versy in  regard  to  renewal  began  just  as  the  hostility  to 
England  was  strongest.  The  arguments  of  the  friends  of 
reciprocity  were  of  no  avail.  The  opponents  of  the  measure 
appealed  to  the  patriotism  of  the  people,  and  to  their  self- 
interest  as  well.  They  showed  the  great  loss  of  revenue 
caused  by^  the  existence  of  the  treaty;  they  made  it  clear 
that  the  British  colonists  .were  profiting  from  the  needs  of 
the  Americans;  and  they  clinched  the  argument  by  reminding 
the  people  of  the  hostility  of  those  very  people  who  were 
growing  rich  from  their  necessities.  The  majority  are 
moved  more  by  their  feelings  than  by  their  judgment.  The 
business  sentiment  of  the  country  favored  a  continuance  of 
the  policy  of  reciprocity,  but  it  .was  overruled  by  the  burst 
of  patriotic  feeling  aroused  throughout  the  nation. 

The  unfortunate  fate  of  the  reciprocity  treaty  has  given 
it  a  false  position  in  the  economic  history  of  the  country. 
As  the  first  measure  of  its  kind  in  the  trade  relations  of  the 
United  States  and  Canada  and  with  no  successor  as  yet,  it 
seems  an  isolated  thing,  unrelated  to  the  preceding  or  suc- 
ceeding periods.  But  this  was  not  really  the  case.  The 
years  from  1846-1870  witnessed  the  development  of  a  policy 
on  the  part  of  the  principal  nations  of  the  world  in  favor  of 
the  removal  of  many  of  the  existing  restrictions  upon  inter- 
national trade.  This  policy,  was  shown  by  the  repeal  of  the 
corn  laws  in  England,  by  the  development  of  the  zollverein 
in  Germany,  by  the  negotiation  of  numerous  commercial 
treaties  and  by  the  reduction  of  import  duties  in  various 
countries-.  In  the  United  States  the  tendency  found  expres- 
sion in  the  negotiation  of  the  reciprocity  treaty  and  in  the 
reduced  tariffs  of  1846  and  1857.  But  this  movement,  un- 
fortunately, was  interrupted  by  the  outbreak  of  the  Civil 
war  in  the  United  States  and  by  the  Franco-Prussian  war  in 
Europe.  The  consequence  of  these  two  events  was  the 
overthrow  of  the  liberal  movement  in  Europe  and  America. 
The  United  States  needed  greater  revenues  for  the  conduct 
of  the  war  and  for  the  payment  of  the  debt  thus  incurred. 


RECIPROCITY 


95 


Europe  since  1870  has  been  an  armed  camp,  and  enormous 
revenues  are  needed  to  keep  in  constant  readiness  the  mil- 
lions of  soldiers,  the  large  navies  and  the  costly  defences 
required  in  such  a  state  of  affairs.  With  the  downfall  of  the 
liberal  movement  disappeared  the  best  hopes  of  better  trade 
relations  between  the  United  States  and  the  British  pro- 
vinces. 


Encyclopedia  of  Social  Reform,  p. 
Bliss,  ed. 


1051.   William  D.  P. 


Reciprocity  Treaties  and  Agreements  Since  1850. 

(Prepared  by  the  Bureau  of  Statistics  of  the  Department  of 
Commerce  and  Labor.) 


Signed        Took  effect     Terminated 


Countries  with  which 
Reciprocity  Treaties 
and  Agreements  have 

been   made 
British      North      American 

possessions    (treaty) June     5,  1854Mch.  16.  1835 Mch.   17,  1866 

Hawaiian  Islands   (treaty)..    Jan.     30,  1875 Sept.     9,  1876Apr.    30,1900 

lira/.il    (agreement) Jan. 

Santo   Domingo    (agreement)  June 
Great    Britain: 

Barbados     (agreement) Feb. 

Jamaica     (agreement) Feb. 

Leeward   Islands    (agree- 
ment)      Feb. 

Trinidad     (including    To- 
bago)    (agreement) Feb. 

Windward     Islands,     ex- 
cepting  Grenada 

(agreement)    Feb. 

British  Guiana 

(agreement)     Feb. 

Salvador    (agreement) Dec. 

Nicaragua     (agreement) Mch.  11,  1892  Mch.   12,  1892 

Honduras    (agreement) Apr.    29,  1892May    25,  1892 

(provisional) 

Austria  Hungary  (agree- 
ment)   May 

France    (agreement) May 

Germany     (agreement) Jan. 

July 

Portugal  and  Azores  and 
Madeira  Islands  (agree- 
ment)   May 

Italy    (agreement) Feb. 

Switzerland        (treaty       of 

1850)     June     1,  1898Mch.   23,  1900 

Switzerland     Jan.      1,  1906  Still  in  force 

Cuba    (agreement) Dec.    17,  1903 Dec.    27,  1903 Still  in  force 


31,  1891  Apr. 
4,  1891  Sept. 

1,  1891 
1,  1891 

1,  1892  Feb. 
1,  1892  Feb. 

1,  1892 
1,  1892 

1,  1892  Feb. 

1,  1892 

1,  1892  Feb. 

1,  1892 

1,  1892  Feb. 

1,  1892Aug  27,  1894 

1,  1892  Feb. 
30,  1891  Feb. 
(prov 

1,  1S92 
1,  1892 
isional) 

25,  1892May    26,  1892 
28,  1898  June     1,  1898  Still  in  force 
1,  1892Aug.    24,  1894 
13,  1900  Still  in  force 


, 

30,  1892 Feb. 
10,  1900 July 


22,  1900 June  12,  1900  Still  in  force 
8,  1900 July    18,  1900  Still  in  force 


96  SELECTED  ARTICLES 

Reciprocity  treaties  or  agreements  were  also  negotiated 
and  signed  under  authority  of  section  4  of  the  Act  of  1897, 
with  the  following  governments:  United  Kingdom,  for  Ja- 
maica, Turks  and  Caicos  Islands,  Barbados,  Bermuda,  and 
British  Guiana;  Dominican  Republic;  Nicaragua;  Ecuador; 
Argentina;  France — but  the  U.  S.  Senate  has  not  acted 
upon  them. 

The  treaty  with  Cuba,  which  went  into  operation  Dec. 
27,  1903,  gives  a  reduction  of  20  per  cent  duty  on  all  dutiable 
articles  from  Cuba  entering  the  U.  S.,  and  a  reduction  rang- 
ing from  20  to  40  per  cent  on  articles  from  the  U.  S.  entering 
Cuba. 

Feb.  28,  1906,  the  president,  by  proclamation,  extended  to 
Germany  the  benefits  of  reductions  of  duty  allowed  under 
section  3  of  the  Dingley  Tariff  Act.  On  Sept.  i,  1906,  a  re- 
ciprocal arrangement  embracing  the  same  articles  went  into 
effect  between  the  U.  S.  and  Spain. 


AFFIRMATIVE  REFERENCES 

Current  Literature.  34:  386-7.  April,  1903. 
United  States  and  Canada. 

When  the  Joint  High  Commission  dissolved  its  sessions 
two  years  ago,  it  was  in  a  deadlock  over  the  Alaskan  Boun- 
dary question.  The  provision  now  made  for  settling  that 
question  opens  the  way  for  a  new  session  of  the  Commission, 
of  which  Sir  Wilfrid  Laurier  is  the  Canadian  head  and  Sena- 
tor Fairbanks  the  American.  About  the  middle  of  Febru- 
ary, Senator  Fairbanks  communicated  with  Mr.  Laurier 
touching  a  reassembling  of  the  Commission  with  a  view  to 
settling  all  outstanding  differences  between  the  United  States 
and  Canada  other  than  the  Alaskan  Boundary  question.  As 
a  result  of  the  correspondence,  the  Commission  will  meet 
again  next  fall,  after  the  adjournment  of  the  Canadian  Parlia- 
ment. The  questions  to  be  considered  are  thus  enumerated: 

Reciprocity  is  trade. 

Transit  of  merchandise  in  bond  through  the  territories  of 
the  two  countries. 

Transit  of  merchandise  of  one  country  to  be  delivered  at 
points  in  the  other  beyond  the  boundary. 

Atlantic,   Pacific  and   Great  Lake  fisheries. 

Seal  fisheries  in  Bering  Sea  and  North  Pacific. 

More  complete  definition  of  the  boundary  line  between 
the  United  States  and  Canada. 

The  armaments  which  the  United  States  and  Canada 
shall  be  allowed  to  maintain  on  the  Great  Lakes. 

Alien  labor  laws. 

Enjoyment  of  mining  rights  by  the  nationals  of  one  in 
the  territory  of  the  other. 

Reciprocity  in  wreckage  and  salvage  rights. 

Transportation  of  criminals. 


98  SELECTED  ARTICLES 

There  may  be  no  special  significance  in  the  resolution  in- 
troduced into  the  National  House  of  Representatives  on 
February  25,  by  Mr.  De  Armand  of  Missouri,  providing  for 
inquiry  whether  Great  Britain,  upon  any  terms  "honorable 
to  both  nations  and  satisfactory  to  the  inhabitants  of  the 
territory  primarily  affected,  would  consent  to  cede  to  the 
United  States  all  or  any  part  of  the  territory  lying  north  of 
and  adjoining  the  United  States,  to  be  formed  in  due  time 
into  one  or  more  states  and  admitted  into  the  Union  upon 
an  equality  with  the  other  States/'  but  the  resolution  shows 
that  the  question  of  a  union  of  the  United  States  and  Canada 
is,  in  one  respect,  like  Shakespeare's  famous  ghost. 

Last  fall,  speaking  at  a  dinner  of  the  Minnesota  Society  of 
New  York,  Archbishop  Ireland  prophesied  such  a  union.  "There 
will  be  no  conquest,  no  war,"  he  declared,  but  "the  hearts  across 
the  border  are  already  beating  with  love  for  us,  and  commerce 
and  agriculture  are  calling  for  espousals."  Somewhat  later,  how- 
ever, in  an  address  in  the  city  of  Toronto,  at  the  unveiling  of 
a  monument  to  the  memery  of  British  and  Canadian  soldiers  who 
fell  in  1812-1815,  Hon.  G.  W.  Ross,  Premier  of  Ontario,  made 
a  declaration  against  any  proposition  to  transfer  the  British  pos- 
sessions in  North  America  to  the  United  States. 

The  opposition  in  the  States  to  commercial  reciprocity 
with  Canada  does  much  to  set  Canadians  against  the  realiza- 
tion of  Archbishop  Ireland's  dream  of  the  Stars  and  Stripes 
floating  "from  the  Gulf  to  the  Bay."  There  are,  however, 
currents  and  counter-currents. 

The  Canadian  Preference  League  is  being  organized  through- 
out the  Dominion  in  the  interests  of  Canadian  products  and  in- 
stitutions against  those  of  the  United  States.  At  the  same  time 
the  Fortnightly  Review  of  London  countenances  the  declaration 
that  England  is  driving  Canada  into  the  arms  of  the  United  States 
by  her  growing  neglect  to  supply  the  peopl-e  with  money  for  Can- 
ada's growing  industries.  The  writer,  who  toured  Canada  last  au- 
tumn, says  that  the  Province  of  Quebec  is  becoming  more  French 
than  France  and  more  Roman  Catholic  than  any  other  part  of  the 
world,  and  declares  that  suggestions  that  the  French  Canadians  are 
most  loyal  subjects  to  the  throne  is  a  mere  fairy  tale.  He  says 
that  there  is  no  English-speaking  Canadian  but  laughs  at  stories  to 
this  effect  published  in  the  old  country.  He  also  quotes  sta- 
tistics, specially  furnished  by  the  Ottawa  departments,  to  prove 
the  inevitable  Americanization  of  the  Canadian  West,  while 
Canada's  dependence  on  New  York  channels  for  British  news 
is  working  in  the  same  direction. 

An  article  in  the  London  Monthly  Review  intimates  that 
Canada  is  being  "Americanized"  to  an  extent  that  makes  her 
loyalty  to  Great  Britain  a  matter  of  doubt.  London  Public  Opin- 
ion says:  "The  risks  latent  in  the  Americanization  of  Canada 
may  easily  be  overstated  at  the  moment,  but  they  must  not  be 
ignored,  and  no  means  of  lessening  them  should  be  missed." 


RECIPROCITY  99 

A  writer  in  the  World's  Work  shows  circumstantially  the  pre- 
ponderating part  now  played  by  Americans  in  the  industrial  de- 
velopment of  Canada.  "What  the  social  and  political  result  will 
be  it  is  too  early  to  prophesy.  In  some  quarters  of  Canada  anxi- 
ety is  expressed,  but,  it  would  seem,  needlessly.  That  the  fusion 
of  the  two  peoples  caused  by  counter  migration  of  Americans 
and  Canadians  across  a  purely  arbitrary  boundary  is  inevitable 
is  the  conclusion  of  some  observers;  but  at  any  rate,  it  guar- 
antees the  final  occupation  of  the  land  by  men  of  the  same  sturdy 
stock,  speaking  the  same  language  and  with  customs,  laws,  and 
religion  essentially  alike.  All  the  way  across  the  continent 
American  pioneering  energy  is  pushing  its  conquests  northward 
across  the  line  and  the  industrial  frontier  is  spreading  farther 
and  farther." 

In  Detroit,  las.t  December,  a  convention  of  United  States 
business  men  met  to  advocate  reciprocity  with  Canada.  One 
speaker  declared  that  the  feeling  is  growing  in  Canada  that 
the  people  of  the  dominion  can  do  without  the  trade  of  the 
United  States.  A  few  days  later,  Sir  F.  W.  Borden,  Canadian 
Conservative  leader,  expressed  the  same  thing  at  a  banquet 
in  New  York,  as  follows: 

\\V  hear  a  great  deal  to-day  about  reciprocity,  and  we  are 
all  waiting  for  something  to  arise  in  this  direction.  After  all 
our  efforts  to  try  to  sell  our  potatoes,  barley,  and  other  products 
to  the  United  States,  \ve  were  finally  compelled  to  seek  a  Euro- 
pean market,  and  we  found  the  open  market  of  Britain  waiting 
for  us.  Now  we  want  to  thank  the  United  States  for  turning 
us  away  and  teaching  us  a  lesson  in  self-reliance. 

Such  utterances  led  the  Toronto  Monetary  Times  to 
say: 

Still  it  must  seem,  to  any  outside  observer  of  the  geograph- 
ical and  commercial  situation  of  the  two  countries,  a  curious 
thing  to  tind  two  great  and  growing  nations,  close  neighbors, 
•  •n gaged  for  a  series  of  years  in  maintaining  barriers  against  each 
other's  trade,  instead  of  cultivating  friendly  relations.  The  thing 
is  an  economic  absurdity.  But  it  exists,  and  the  United  States 
is  to  blame  for  it,  since  she  did  away  with  the  1854  treaty  in 
;m  unjustifiable  pet,  and  Canada  has  time  and  again  offered  to 
reciprocate,  but  the  Washington  authorities  will  not. 

The  reply  to  this,  by  those  who  justify  the  course  of  the 
1'nited  States,  is  thus  put  by  the  New  York  Tribune: 

The  two  points  which  it  is  desirable  to  dwell  upon  are  these 
— that  Canada  has  no  real  grievance  against  the  United  States 
and  that  she  now  is  and  long  has  been  discriminating  against 
the  United  States  as  between  this  country  and  Great  Britain. 
As  \v«>  have  hitherto  pointed  out,  the  United  States  makes  no 
discrimination  against  Canada.  Its  rates  of  import  duties  are 
the  same  for  all  countries.  It  taxes  Canadian  goods  no  more 
than  those  of  other  lands.  Thus  there  is  absolutely  no  ground 
for  the  notion,  which  some  injudiciously  put  forth,  that  the  United 
Slates  is  treating  Canada  with  special  injustice  and  oppression. 
This  country  is  doing  no  such  thing.  It  is  treating  Canada  just 
as  it  treats  all  others,  and  the  Canadian  demand  is,  therefore. 


zoo  SELECTED  ARTICLES 

not  for  the  abatement  of  a  special  grievance,  but  for  the  grant- 
ing- to  her  of  special  favors.  On  the  other  point  named  it  is  to 
be  remarked  that  Canada  has  for  years  had  a  tariff  law  under 
which  she  has,  to  our  disadvantage,  shown  special  favors  to  our 
chief  rival  in  her  market.  She  lets  in  goods  from  Great  Britain 
at  a  much  lower  rate  of  duty  than  similar  goods  from  the 
United  States,  and  it  is  notorious  that  she  adopted  that  system 
not  only  for  the  sake  of  benefiting  Great  Britain,  but  also  for 
the  sake  of  injuring  the  United  States.  But  this  country  has 
not  got  angry  or  excited  over  it.  It  has  placidly  acquiesced  in 
Canada's  undoubted  right  to  make  whatever  tariff  arrangement 
she  pleases  with  the  mother  country,  especially  since  in  this 
case  the  arrangement  is  a  step  toward  the  adoption  of  our  own 
principle  of  free  trade  among  the  members  of  the  Union  and  pro- 
tection against  all  the  outside  world.  Only  the  fact  remains  that 
because  of  that  very  arrangement  it  is  Canada  that  is  discrimi- 
nating against  us  and  not  we  against  her. 

The  Detroit  National  Reciprocity  Convention,  above  re- 
ferred to,  asked  Congress  to  move  for  recovering  the  Joint 
High  Commission  to  treat  with  Canada  on  the  basis  of  reci- 
procity jn  natural  products.  In  January,  the  National  Board 
of  Trade,  convened  in  Washington,  made  a  similar  request 
of  Congress  and  indorsed  the  Bond-Hay  treaty  with  New- 
foundland, which,  however,  Congress  has  thus  far  neglected 
to  ratify.  Concurrence  in  the  position  of  the  Detroit  Con- 
vention and  the  National  Board  of  Trade  characterizes 
branch  reciprocity  leagues  and  commercial  organizations  in 
various  parts  of  the  United  States.  On  the  whole,  the  Hon. 
John  Charlton,  M.  P.,  the  noted  Canadian  advocate  of 
reciprocity,  is  led  to  say  in  opening  an  article  in  the  Out- 
look for  February  29,  that  circumstances  seem  to  warrant 
the  belief  that  public  sentiment  in  the  States  is  assuming  a 
more  liberal  attitude  toward  the  question  of  reciprocity  with 
Canada. 

Forum.  29:  471-80.  June,  1900. 

• 
American  and  Canadian  Trade  Relations.     J.  Charlton. 

The  relative  geographical  positions  of  the  United  States 
and  Canada,  with  their  counterminous  boundary  line  extend- 
ing from  the  Atlantic  to  the  Pacific,  with  similarity  of  ethno- 
logical conditions,  of  laws,  and  of  political  institutions, 
should  naturally  lead  to  intimate  commercial  and  social  re- 
lations. Affinities  so  pronounced  as  those  existing  between 


RECIPROCITY  to? 

these  two  sections  of  the  North  American  continent  can  only 
fail  to  produce  such  results  through  the  interposing  of  poli- 
cies calculated  to  impair  the  influence  of  natural  conditions. 
The  two  countries,  while  geographically  a  unit,  are  possessed 
of  dissimilarity  of  climate  and  diversity  of  production  to  a 
degree  so  marked  as  to  be  calculated  to  stimulate  inter- 
communication and  commerce.  Canada  requires  the  raw 
cotton,  the  tobacco  leaf,  the  iron,  steel,  and  coal  of  the  United 
States  for  her  manufacturing  operations;  she  requires  also 
the  tropical  fruits  of  the  South  and  a  great  variety  of  Ameri- 
can manufactures;  and  in  exchange  it  is  natural  that  she 
should  send  to  the  United  States  her  forest,  farm,  and  mine 
products. 

The  natural  barriers  which  separate  portions  of  the  two 
countries — the  great  inland  seas,  and  the  mighty  river  which 
is  their  outlet — are  of  a  character  to  invite  and  facilitate 
inter-communication  rather  than  to  offer  obstacles  to  its 
fullest  development.  The  geographical  position  of  the  east- 
ern portion  of  the  United  States  is  such  as  to  afford  to  the 
province  of  Ontario,  to  a  portion  of  the  province  of  Quebec, 
and  to  the  vast  Canadian  Northwest,  with  its  enormous 
future  possibilities,  the  shortest  and  most  feasible  routes  to 
the  sea.  Portland,  Boston,  New  York,  Philadelphia,  and 
Baltimore  are  the  natural  winter  ports  of  extensive  sections 
of  the  Canadian  territory;  and  the  Erie  Canal  and  the 
railway  routes  from  Buffalo  to  the  sea-board  have  afforded 
hitherto  the  nearest  and  most  inviting  outlets  to  tide- 
water for  a  considerable  portion  of  the  exportable  products 
of  the  sections  of  Ontario  bordering  upon  Lakes  Erie,  Hur- 
on, and  Superior,  and  for  the  grain  of  Manitoba  and  the 
Canadian  Northwest  which  finds  its  outlet  by  lake  ship- 
ment from  Fort  William. 

Movements  have  already  been  made  for  the  establish- 
ment of  ferry  services  across  Lake  Erie  from  the  coal-mines 
and  iron-works  of  Pennsylvania  and  Ohio  to  the  rich  dis- 
trict of  Western  Ontario.  A  harbor  is  approaching  comple- 
tion at  Port  Burwell,  on  the  north  shore  of  Lake  Erie,  which 
will  afford  deep  water  as  well  as  excellent  facilities  for  win- 


ibtf  SELECTED  ARTICLES 

ter  entrance  at  a  point  which  geographically  is  most  advan- 
tageous. A  short  line  from  this  port  connects  with  all  the 
trunk  lines  of  Ontario,  and  will  not  only  furnish  inward 
business,  but  will  afford  an  outlet,  summer  and  winter,  by 
car  ferriage,  for  the  various  Canadian  products  seeking  ex-' 
portation.  In  winter,  these  can  be  sent  much  more  cheaply 
and  expeditiously  to  Baltimore  and  Philadelphia  than  to 
Canadian  points.  This  is  one  of  many  schemes  for  in- 
creased facilities  of  transportation,  and  is  mentioned  to  illus- 
trate the  fact  that  the  possibilities  for  development  of  inter- 
communication and  for  increase  of  business  between  the  two 
countries  are  indefinite  and  well-nigh  unlimited. 

Intimate  knowledge  of  the  extent  and  resources  of  Canada 
is  not  as  a  rule  possessed  by  the  American  people.  Little 
is  known  of  the  country,  of  its  future  possibilities,  of  its 
area,  and  of  its  value  as  a  customer  at  the  very  door  of  the 
United  States.  Even  under  the  conditions  that  at  the  pres- 
ent moment  govern  trade,  conditions  which,  as  far  as  the 
fiscal  policy  of  the  United  States  is  concerned,  are  repres- 
sive, Canada,  with  its  5,500,000  inhabitants,  is  a  better  custo- 
mer to  the  United  States  than  all  of  Spanish  America,  with 
a  population  of  55,000,000,  and  comprising  Mexico,  the  Cen- 
tral American  States,  all  of  South  America,  and  all  of  the 
West  Indies,  including  Cuba  and  Porto  Rico.  For  the  year 
1898,  the  total  exports  of  the  United  States  to  this  enormous 
region  reached  the  sum  of  $86,786,000,  while  the  total  ex- 
ports of  the  United  States  to  Canada  for  the  same  year  were 
$86,537,000.  For  the  year  1899,  the  exports  to  Canada  from 
the  United  States  have  largely  increased,  exceeding  in 
amount  the  exports  to  Spanish  America  and  the  West 
Indies.  This  fact  is  indicative  of  the  possibilites  of  trade 
between  the  United  States  and  the  northern  half  of  the 
North  American  continent. 

The  total  trade  of  Canada  last  year,  exports  and  imports, 
was  $312,948,000,  divided  as  follows: 

Total  trade  with  Great  Britain $136,151,000 

Total  trade  with  the  United  States 138,140,000 

Total  trade  with  all  other  countries 38,657,000 


RECIPROCITY  103 

Of  this  total  trade  the  amount  with  Great  Britain  con- 
sisted chiefly  of  exports,  while  the  amount  with  the  United 
States  consisted  chiefly  of  imports. 

The  total  exports  to  Great  Britain  were $99,860,000 

The  total  imports  from  Great  Britain  were 37,600,000 

The  total  exports  to  the  United  States,  ex  coin, 
bullion,  and  estimated  short  returns,  which 
latter  were  more  than  counterbalanced  by 

smuggling   into    Canada,   were 36,562,000 

Of  this  amount  the  exports  to  the  United  States,  the 
produce  of  Canada,  ex  coin,  bullion,  and  estimated  short 
returns,  were  $34,766,000. 

The  total  imports  from  the  United  States  were.  .$101,642,000 
The   total  exports  of  Canada  to  all  foreign  coun- 
tries   except    the    United     States    and    Great 

Britain    were    14,677,000 

The  total  imports  from  all  other  countries  were.     24,175,000 

Jntldnccs  of  Trade 

The  balance  of  trade  against  Canada  on  total  ex- 
ports and  imports  was $3,868,000 

The  balance  of  trade  in  favor  of  the  United  States 

on  total  exports  and  imports  was 56,509,000 

The  balance  of  trade  against  Canada  on  total  ex- 
ports and  imports  with  all  foreign  countries 
except  the  United  States  and  Great  Britain 
was 9,499,000 

The  balance  of  trade  against  Great  Britain  upon 

total  exports  and  imports  was 62,141,000 

In  other  words,  Canada  sold  to  Great  Britain  more  than 
she  purchased  from  that  country,  and  used  the  chief  part  of 
this  balance  in  her  favor  to  pay  for  her  importations  from 
the  United  States. 

The  superior  liberality  of  the  Canadian  trade  policy  as 
compared  with  that  of  the  United  States  is  clearly  demon- 
strated by  a  statement  of  the  relative  rates  of  duties  levied 


104  SELECTED  ARTICLES 

by    the    two    countries.     For    the    year    1899    the    Canadian 
rates  of  duties  were  as  follows: 

Rate  of  duty  upon  total  imports 15.81 

Rate  of  duty  upon  imports  for  consumption 16.07 

Rate  of  duty  upon  dutiable  imports....  *. 26.16 

Rate  of  duty  upon  dutiable  imports  for  consumption.  28.77 

In  the  United  States  the  rates  of  duty  for  the  previous 
year  were: 

On    total    imports 24.78 

On    dutiable    imports 49.20 

The  exact  rate  for  1899  is  not  at  hand,  but  it  could  have 
varied  only  slightly  from  that  of  1898. 

Notwithstanding  the  preferential  rate  of  25  per  .cent  in 
favor  of  Great  Britain — which  has  been  increased  during 
the  present  session  of  Parliament  to  33^  per  cent,  and 
which  it  is  probable,  in  the  estimation  of  the  Canadian  Gov- 
ernment has  been  called  for  by  the  superior  liberality  of 
Great  Britain  toward  Canada  in  trade  matters  as  compared 
with  the  United  States — and  notwithstanding  the  fact  that 
England  furnishes  a  market  for  Canadian  products  greatly 
in  excess  of  that  furnished  by  the  United  States,  the  volume 
of  imports  from  each  country  still  leaves  a  decided  advan- 
tage in  favor  of  the  United  States.  From  the  latter  coun- 
try we  purchase  a  class  of  manufactures  quite  distinct  in  the 
main  from  the  kinds  purchased  of  Great  Britain;  and  the 
differential  duties  do  not  seem  to  have  had  the  practical 
influence  upon  the  relative  volumes  of  trade  of  the  two 
countries  that  might  have  been  anticipated.  The  rates  of 
duty  from  Great  Britain,  from  the  United  States,  and  from 
the  rest  of  the  world,  including  the  British  possessions, 
for  the  year  1899,  were  as  follows: 

Prom  Great  Britain 

Rate  of  duty  upon  total  imports 19.80 

Rate  of  duty  upon  imports  for  consumption 19.83 

Rate  of  duty  upon  dutiable  imports 26.69 

Rate  of  duty  upon  dutiable  imports  for  consumption.  26.27 


RECIPROCITY  105 

From  the  United  States 

Rate  of  duty  upon  total  imports 1 1.52 

Rate  of  duty  upon  imports  for  consumption 12.59 

Rate  of  duty  upon  total  dutiable  imports 24.22 

Rate  of  duty  upon  ^dutiable  imports  for  consumption .  24.13 

Prom    All   Other    'Countries,   Including    the   British   Possessions 

Rate  of  duty  upon  total  imports 27.68 

Rate  of  duty  upon  imports  for  consumption 27.94 

Rate  of  duty  upon  dutiable  imports 37-98 

Rate  of  duty  upon  dutiable  imports  for  consumption.  38.37 

The  imports  of  Canada  per  capita  for  1899  were  as  fol- 
lows: 

Total  imports,   per  capita $29.59 

Imports  from   Great   Britain,  per  capita 6.71 

Imports  from  the  United  States,  per  capita 18.48 

Imports  from  the  rest  of  the  world,  per  capita 4.40 

Contrasted  with  this  is  the  fact  that  the  total  imports 
per  capita  of  the  United  States  from  Canada  were  $0.60. 
Words  cannot  strengthen  the  presentation  of  the  case  made 
by  the  cold  figures. 

The  liberality  of  the  Canadian  trade  policy  toward  the 
United  States  as  contrasted  with  the  repressive  trade  policy 
of  the  latter  country  toward  Canada  is  further  illustrated  by 
the  statement  that  the  total  importation  of  free  goods  for 
consumption  into  Canada  for  the  year  1899  amounted  to 
$64,618,000,  of  which  amount  different  countries  furnished 
as  follows: 

United   States    $48,535,ooo 

Great    Britain    9,538,ooo 

All    other    countries 6,544,000 

The  advantage  enjoyed  by  the  United  States  in  the 
matter  of  free  entry  for  goods  into  Canada,  as  compared 
with  other  countries,  will  be  shown  by  a  statement  of  the 


io6  SELECTED  ARTICLES 

amounts,    based    on    percentages.     Upon    this    basis    the    re- 
sult is  as  follows: 

Percentage  of  free  goods  from  the  United  States 75.11 

Percentage  of  free  goods  from  Great  Britain 14.91 

Percentage  of  free  goods  from  all  other  countries 9.98 

To  offset  this  enormous  free  list  in  'favor  of  the  United 
States  it  is  doubtful  whether  $5,000,000  worth  of  Canadian 
products  are  given  free  admission  into  the  American  market. 
The  percentages  of  imports  into,  and  exports  from,  Canada 
are  as  follows: 

Imports 

Total    imports     $162,764,000 

Total  imports   from   Great   Britain 36,945,000 

Percentage  of  total  imports 22.69 

Total  imports  from  the  United  States . . .  .\ $101,642,000 

V_X^ 
Percentage  of  the  total  imports 62.44 

Total  imports  from  all  other  countries $24,175,000 

Percentage  of  total  imports 14.87 

Exports 

Total  exports   of  Canada $158,896,000 

Total  exports  of  Canada  to  Great  Britain 99,086,000 

Percentage  of  the  total  amount 62.35 

Total  exports  to  the  United  States,  including 
coin  and  bullion  $4,011,151,  and  estimated 
short  returns  $4,559,530. : $45>i33,ooo 

Percentage  of  the  total  amount 28.40 

Total  exports  to  all  other  countries $14,677,000 

Percentage  of  the  total  amount 9.25 

A  striking  illustration  of  the  unsatisfactory  condition  of 
trade  relations  between  the  two  countries,  viewed  from  a 
Canadian  standpoint,  is  furnished  by  the  statistics  of  1899 
relating  to  the  export  and  import  trade  in  farm  products. 
As  is  seen  by  the  above  statements,  Canada  is  a  large  im- 


RECIPROCITY  107 

porter  of  American  products,  and  this  is  especially  the  case 
in  regard  to  American  manufactures.  The  general  im- 
pression is  that  Canada's  exports  of  farm  products  to  the 
United  States  are  greatly  in  excess  of  the  amount  of  her 
imports  in  the  same  line  from  that  country.  Being  a  pur- 
chaser to  an  enormous  extent  of  the  products  of  American 
skilled  labor,  it  is  but  natural  to  suppose  that  Canada 
should  find  a  market  in  the  United  States  to  an  equal,  or  a 
nearly  equal,  extent  for  her  raw  material,  in  exchange  for 
>uch  finished  commodities  as  she  purchases.  On  a  fair 
basis  of  trade  arrangement  this  ought  to  be  the  case.  As 
facts  actually  exist,  however,  the  market  in  the  United  States 
for  Canadian  farm  products  is  of  comparatively  small  mo- 
ment; Canadian  sales  to  the  United  States  of  farm  products 
being  very  much  less  than  Canadian  purchases  of  farm 
products  from  that  country. 

The  export  of  farm  products,  the  produce  of  Canada,  to 
the  United  States,  for  1899  was  as  follows: 

Export   of  agricultural   products $1,149,686 

Export  of  animals  and  their  products 4,628,533 


Total    $5,778,219 

Imports    of   farm    products    for    consumption    by    Canada 
from  the  United  States,  for  1899,  were  as  follows: 
Imports  of  agricultural  products  from  the  United  States  for 

consumption,  dutiable  and  free,  for  1899 $18,686,000 

Imports  of  animals  and  their  products  from  the 
United  States  for  consumption,  dutiable  and 
free,  for  1899 5,763000 


Total    $24,448,000 

Of  these  amounts,  $16,202,612  of  agricultural  products 
and  $3,514,938  of  animals  and  their  products  were  free. 

The  surprising  result,  therefore,  is,  that  in  1899  Canada 
bought  farm  products  from  the  United  States  for  consump- 
tion to  the  extent  of  more  than  four  times  the  value  of  the 
farm  products  she  sold  to  that  country.  If  from  the  list  of 
her  purchases  of  farm  products  from  the  United  States  we 


io8  SELECTED  ARTICLES 

should  eliminate  raw  cotton  and  tobacco  leaf,  amounting  to 
$4,989,000,  the  account  would  stand:  Purchases,  $19,459,000; 
sales,  $5,778,000 — purchases  over  three  and  one-third  times 
as  great  as  the  sales. 

The  same  year  the  sales  of  Canada  to  Great  Britain,  of 
agricultural  products,  the  produce  of  Canada,  were  $18,447,- 
ooo,  and  of  animals  and  their  products,  the  produce  of 
Canada,  $41,604,000,  total  $60,051,000;  making  the  exports  of 
farm  products,  the  produce  of  Canada,  to  Great  Britain 
more  than  ten  times  as  great  as  her  exports  of  the  same 
products  to  the  United  States.  This,  and  the  fact  that  the 
total  imports  of  Canada  from  the  United  States  were 
nearly  three  times  greater  than  her  total  imports  from 
Great  Britain,  will  serve  to  illustrate  why  her  Government 
has  seen  fit  to  give  Great  Britain  preferential  treatment. 

It  may  seem  surprising  that  so  great  a  disparity  should 
exist  between  the  imports  of  farm  products  from  the  United 
States  into  Canada  and  the  exports  in  the  same  line  from 
Canada  to  the  United  States.  The  reason  is  twofold:  (i) 
The  American  duties  on  the  agricultural  schedule  are  evi- 
dently designed  to  be  as  nearly  as  possible  prohibitive;  and 
(2)  Canada  has  a  vast  and  ever-increasing  market  for  food 
products  in  her  new  mining  regions  and  in  other  sections 
of  the  Dominion,  and  has  a  large  population  of  food  con- 
sumers not  engaged  in  the  production  of  food.  This  popu- 
lation is  chiefly  engaged  in  lumbering,  mining,  and  the 
fisheries. 

As  another  illustration  of  the  great  liberality  of  Canadian 
fiscal  regulations  as  compared  with  those  of  the  United 
States,  the  permission  to  import  corn  from  the  United 
States  free  of  duty  may  be  mentioned.  Corn  was  placed 
upon  the  free  list  in  1897.  The  importation  of  that  grain 
last  year  from  the  United  States  amounted  to  23,342,000 
bushels,  valued  at  $8,966,000.  For  this  concession  no  cor- 
responding concession,  either  in  reduction  of  duty  or  in 
placing  any  kind  of  grain  upon  the  free  list,  has  been  made 
by  the  United  States. 

The  importation  of  manufactures  from  the  United  States 
into  Canada  in  1898  amounted  to  $40,662,000,  and  in  1899  to 


RECIPROCITY  109 

$48,645,000.  This  amount  exceeded  the  importation  of  manu- 
factures from  Great  Britain  for  that  year  by  the  sum  of 
$11,500,000.  Of  this  importation,  $13,292,000  was  on  the 
free  list.  The  farmers  of  Canada  probably  took  not  less 
than  $25,000,000  of  the  entire  amount,  and,  in  return,  they 
were  permitted  to  sell  to  the  United  States  the  comparative- 
ly insignificant  amount  of  $5,778,219  of  farm  products,  while 
they  saw  the  farmers  of  the  United  States  taking  possession 
of  their  own  markets  in  the  same  line  to  the  extent  of  three 
and  a  third  times  that  amount. 

The  above  statistics  will  make  clear  the  fact  that  the 
American  market  is  practically  sealed  to  Canada  for  the 
products  of  the  farm.  Naturally,  therefore,  Canada  has 
turned  her  attention  to  seeking  new  outlets;  and  having 
done  so  with  great  success,  the  importance  of  the  American 
market  to  her  is  becoming  of  smaller  moment  year  by  year. 
A  feeling  is  also  gradually  taking  hold  of  the  public  mind, 
which,  if  not  one  of  hostility,  is  one  of  intense  dissatisfac- 
tion with  the  commercial  policy  of  the  United  States  toward 
Canada;  and  the  day  is  probably  not  distant  when  practical 
action  will  be  demanded,  either  in  the  shape  of  securing 
increased  exports  to  the  United  States  or  of  adopting  a 
policy  which  will  very  sharply  curtail  importation  from  that 
country. 

The  lumber  trade  of  Canada  with  the  United  States  has 
of  late  been  one  of  diminishing  quantity;  and  the  American 
policy  of  imposing  heavy  duties  upon  forest  products 
amounts,  in  effect,  to  a  liberal  premium  on  forest  destruc- 
tion in  the  United  States.  The  rapidly  diminishing  supply  of 
white1  pine,  it  appears  from  the  best  authorities,  will  be 
practically  exhausted  in  five  years  more,  and  the  American 
duty  of  $2  per  thousand  is  hastening  the  day  when  the  last 
pine-tree  will  be  cut.  The  duty  upon  Canadian  lumber  is 
rapidly  changing  the  course  of  Canadian  trade  in  that 
article.  Until  within  the  last  three  years  the  exports  of 
forest  productions  to  the  United  States  exceeded  the  ex- 
ports in  the  same  line  to  Great  Britain.  Last  year,  how- 
ever, the  exports  to  the  British  possessions  amounted  to 
$16,361,000,  while  the  quantity  exported  to  the  United  States 


no  SELECTED  ARTICLES 

had  shrunk  to  $9,921,000,  a  considerable  portion  of  which 
passed  through  the  United  States  in  bond  for  export.  While 
this  trade  is  burdened  with  the  duty  of  $2  per  thousand, 
Canada  imported  from  the  United  States  last  year  forest 
products  free  of  duty  to  the  amount  of  $2,996,000.  The 
Government  has  refused  the  demand  of  Canadian  lumber- 
men to  impose  duties  upon  this  importation  corresponding 
to  the  American  duties  upon  importations  of  tire  same  class 
into  that  country;  wisely  deeming  it  improper  to  burden 
new  settlers  in  the  Northwest  by  duties  upon  lumber  which 
in  many  sections  can  be  obtained  more  cheaply  from  Min- 
nesota than  from  Canadian  sources. 

The  feeling  of  resentment  caused  by  the  meagre  charac- 
ter of  the  American  free  list  as  compared  with  that  of 
Canada,  and  the  striking  of  lumber  from  the  free  list  when 
the  Wilson  Bill  was  superseded  by  the  Dingley  Bill,  finds 
expression  in  the  province  of  Ontario  in  the  prohibition  of 
the  export  of  saw-logs  and  pulp-wood,  and  in  the  province 
of  Quebec  in  a  differential  Crown  due  on  the  export  of  pulp- 
wood  of  $1.50  per  cord,  the  Crown  due  for  local  consump- 
tion being  forty  cents  per  cord,  and  for  export  $1.90.  Upon 
the  broad  ground  of  political  economy  this  system  unques- 
tionably is  bad  policy,  and  it  is  highly  unfavorable  to  the 
interests  of  those  holding  timber;  but  it  is  almost  univer- 
sally popular,  because  it  is  felt  that  it  affords  a  method  of 
striking  back  and  giving  a  quid  pro  quo  for  an  ungenerous 
policy  toward  us.  Its  chief  weakness  lies  in  the  fact  that 
its  application  to  old  sales  of  timber  berths  and  to  licenses 
issued  before  the  passage  of  the  law  is  denounced  by  the 
sufferers  as  a  breach  of  faith.  No  one,  perhaps,  would  feel 
disposed  to  cavil  at  its  application  in  all  cases  when  it  has 
been,  or  can  be  made,  a  condition  of  sale ;  but  the  ex-post- 
facto  feature  of  the  legislation  is  no  doubt  of  very  question- 
able character. 

The  statements  of  trade  relations  between  America  and 
Canada  contained  in  this  article  make  it  evident  that  the 
American  fiscal  policy  toward  Canada  is  illiberal  as  com- 
pared with  the  Canadian  fiscal  policy  toward  the  United 
States.  That  it  is  in  the  interest  of  the  United  States  it  is 


RECIPROCITY  in 

hardly  possible  to  believe.  The  export  trade  between  Can- 
ada and  the  United  States  in  articles  the  produce  of  Canada 
has  practically  stood  still  since  the  abrogation  of  the  Reci- 
procity Treaty  in  1866,  and  in  1899  was  actually  a  fraction 
less  than  in  the  former  year.  The  admission  to  the  Ameri- 
can market  of  Canadian  farm  products  would  have  little,  if 
any,  influence  upon  prices  received  by  American  agricultur- 
ists, as  Canadian  importations  would  be  so  small,  compared 
with  the  great  volume  of  American  production,  as  to  produce 
little  influence  upon  market  prices.  The  fear  of  Canadian 
competition,  on  the  part  of  the  American  farmer,  is  ill- 
founded;  for  both  meet  in  the  common  market  of  England 
for  the  sale  of  farm  products,  and  the  interchange  of  such 
products  between  the  two  countries  would  not  produce  the 
.-lightest  effect. 

Had  free  trade  in  natural  products  been  permitted  since 
iSdn,  or  even  for  a  period  of  ten  or  fifteen  years  past,  the 
volume  of  trade  between  the  two  countries  would  have 
been  In-vond  all  reasonable  doubt  two  or  three  times  greater 
than  it  i>  at  present.  The  two  people  would  have  been 
brought  into  more  intimate  relations,  both  socially  ana 
commercially;  the  tone  of  public  sentiment  in  the  two 
countries  would  have  been  more  healthy;  and  each  country 
would  have  known  more  about  the  other,  which  is  all  that 
is  necessary  to  assure  mutual  respect.  Unquestionably,  by 
fostering  such  intimate  trade  relations,  the  interests  of  each 
country,  and  of  the  entire  English-speaking  race,  would  have 
been  promoted,  with  the  natural  concomitant  of  more 
friendly  feeling. 

The  present  condition  of  affairs,  if  permitted  to  continue, 
\\ill  develop  into  more  serious  estrangement,  and  will 
probably  lead  in  due  time  to  imitation,  by  the  Government 
of  Canada,  of  the  fiscal  policy  of  the  United  States,  as  con- 
cerns the  relations  between  these  two  countries.  It  might 
1-crhaps  be  worth  the  while  of  American  economists  to  con- 
sider the  probable  effect  of  raising  the  Canadian  standard 
of  26  per  cent  on  dutiable  imports  to  the  American  standard 
of  49  per  cent,  with  perhaps  an  increase  of  the  differential 
in  favor  of  Great  Britain.  This  course  would  greatly  stimu- 


ii2  SELECTED  ARTICLES 

late  the  development  of  our  manufacturing  system;  and  it 
would  also  enable  our  farmers  to  furnish  food  for  the  op- 
eratives whose  products  they  consume,  a  privilege  now  al- 
most absolutely  denied  to  them  in  the  case  of  the  American 
operatives,  whose  productions  were  taken  last  year  by  Ca- 
nadian consumers  to  the  extent  of  more  than  eight  times 
the  value  of  Canadian  farm  products  permitted  entrance 
into  the  markets  of  the  United  States. 


Forum.  32:  582-93.  January,   1902. 
Reciprocity   with    Canada.     J.    Charlton. 

Geographical  and  ethnic  conditions  have  always  sug- 
gested to  the  Canadian  that  broad  and  liberal  trade  rela- 
tions with  the  United  States  would  be  natural  and  mutually 
advantageous.  He  has  invariably  acted  upon  this  view,  and 
the  repeated  rejection  of  his  overtures  has  not  seriously 
shaken  his  faith  in  the  doctrine  that  the  present  trade  situa- 
tion could  be  easily  changed  for  the  better.  In  1854  the 
efforts  he  made  for  more  liberal  terms  were  crowned  with 
success  through  the  negotiation  and  ratification  of  a  reci- 
procity treaty  which  was  to  continue  in  force  for  twelve 
years,  and  then  to  be  terminable  at  one  year's  notice.  This 
treaty  provided  reciprocal  entry  for  the  natural  products  of 
each  country  into  the  markets  of  the  other.  Under  its  pro- 
visions there  followed  a  great  expansion  of  trade  between 
the  two  countries,  an  increase  of  social  intercourse,  and  an 
advance  in  the  direction  of  community  of  interest. 

Notice  of  the  abrogation  of  the  reciprocity  treaty  of  1854 
was  given  by  the  United  States  Government  in  1865.  The 
primary  cause  of  this  action  was  supposed  to  be  a  feeling  of 
resentment  provoked  by  the  fact  that  news  of  the  Federal 
defeat  at  Chancellorsville  had  been  received  with  cheers  by 
the  majority  of  the  Tory  members  of  the  Canadian  Parlia- 
ment, then  in  session  at  Quebec.  At  this  time  public  feeling 
in  Canada  regarding  the  War  of  the  Rebellion  ran  high. 
The  Liberals  of  the  country  almost  to  a  man  sympathized 


RECIPROCITY  113 

with  the  South.  The  action  of  the  United  States  in  giving 
notice  of  the  abrogation  of  the  treaty  was  ill-judged,  if  it 
was  prompted  by  this  incident.  There  were  copper-heads  in 
the  North,  in  no  insignificant  numbers,  as  ready  to  cheer 
over  Federal  reverses  as  was  the  Tory  contingent  in  the  Ca- 
nadian Parliament.  No  less  than  40,000  Canadians  had 
aided  in  fighting  the  battles  of  the  Union.  The  majority  of 
the  people  of  Canada  were  intensely  sympathetic  with  that 
cause,  and  the  abrogation  of  the  treaty  was  a  wet  blanket 
upon  their  zeal;  tending  to  strengthen  and  spread  the  feel- 
ing for  which  it  was  supposed  to  be  designed  as  a  punish- 
ment. 

It  was  contended  that  the  operation  of  the  treaty  gave 
the  greater  advantages  to  Canada.  To  a  limited  extent,  and 
in  the  narrow  sphere  of  present  results,  this  may  possibly 
have  been  true;  but  a  statesmanlike  view  of  the  operation 
of  causes  that  would  tell  upon  the  future  was  not  taken  by 
those  who  held  this  opinion.  A  sordid  reckoning  as  to 
which  of  the  parties  to  the  agreement  sold  the  most  was 
allowed  to  hide  from  view  the  march  of  destiny  and  the 
fraternal  blending  of  the  unmeasured  forces  of  the  future. 
If  the  treaty  in  its  practical  workings  was  unsatisfactory  to 
the  United  States,  Canada  was  ready  to  modify  its  provi- 
sions; it  was,  in  fact,  anxious  to  do  so.  Before  the  fated 
day  of  abrogation  arrived,  Canadian  envoys  had  visited 
Washington  to  plead  for  the  continuance  of  fraternal  trade 
relations,  under  a  treaty  to  be  modified  in  any  way  that 
was  reasonable  and  just.  Their  reception  was  a  rebuff — 
cold,  positive,  and  absolute.  They  returned  from  their 
fruitless  errand;  and  Canada  at  once  set  about  the  confed- 
eration of  the  British  North  American  Provinces,  a  task 
which  was  accomplished  in  1867. 

In  twelve  years  the  treaty  had  more  than  quadrupled  the 
amount  of  trade  between  Canada  and  the  United  States,  and 
had  led  to  a  very  large  increase  in  the  importation  of  Amer- 
ican manufactures  into  Canada.  The  War  of  the  Rebellion 
had  created  a  demand  for  Canadian  farm  products  greater 
than  would  have  existed  under  normal  conditions;  and  the 


ii4  SELECTED  ARTICLES 

exportation  of  natural  products  to  the  United  States  in  1866, 
the  last  year  in  which  the>  treaty  remained  in  force,  was 
greatly  stimulated  by  the  approaching  abrogation,  the  date 
of  which  was  known  in  advance.  In  that  year  the  total  ex- 
port of  the  British  North  American  Provinces  to  the  United 
States,  including  estimated  short  returns  from  inland  ports 
of  $4,185,692,  was  $44,143,908.  This  amount  was  composed 
in  large  part  of  farm  products,  namely,  animals  and  their 
products  $11,319,243,  and  agricultural  products  $13,722,721, 
these  two  items  together  amounting  to  $25,041,964.  In  the 
same  year  the  British  American  imports  from  the  United 
States  amounted  to  $28,572,000,  a  considerable  proportion  of 
which  consisted  of  manufactures.  It  will  be  borne  in  mind 
that  the  imports  into  Canada  for  the  year  1866  were  made  in 
the  natural  course  of  trade,  while  the  exports,  for  the  rea- 
son above  stated,  were  abnormal  in  amount.  It  is  reason- 
able to  conclude  that  the  tendency  under  natural  conditions 
would  have  been  to  secure  the  equalization  of  exports  and 
imports. 

In  1866  the  British-American  exports  to  Great  Britain 
amounted  to  $16,826,000,  and  the  imports  from  Great  Britain 
to  $40,062,000.  The  most  considerable  items  on  the  list' of 
exports  consisted  of  forest  products  and  ships  built  at  Que- 
bec. The  exports  of  farm  products  from  the  provinces  of 
Nova  Scotia,  New  Brunswick,  and  Prince  Edward  Island 
were  inconsiderable.  From  the  United  Provinces  of  Canada 
they  were  as  follows:  animals  and  their  produce  $1,326,000, 
and  agricultural  products  $2,217,000,  making  a  total  of  $3,- 
543,000.  The  imports  from  Great  Britain  consisted  largely 
of  manufactures.  It  will  thus  be  seen  that  in  the  last  year 
of  the  operation  of  the  reciprocity  treaty  of  1854  the  chief 
market  for  Canada's  farm  products  was  the  United  States, 
while  the  chief  source  of  supply  for  its  manufactures  was 
Great  Britain. 

Following  the  abrogation  of  the  reciprocity  treaty  came 
the  imposition  by  the  United  States  of  duties  upon  farm 
products.  These  duties  were  of  an  almost  prohibitory  char- 
acter. It  is  not  unlikely  that  the  belief  was  entertained 


RECIPROCITY  115 

that  Canada  required  access  to  the  American  market  for  her 
surplus  fartn  products,  and  that  duties  reaching  to  the 
limit  of  exclusion  would  force  political  union.  If  this  opin- 
ion was  entertained,  events  proved  it  to  be  utterly  mistaken. 
The  policy  of  repression  at  once  begat  bitterness  and  deep- 
seated  resentment,  and  the  two  peoples  commenced  to  drift 
asunder.  The  Canadian  was  put  upon  his  mettle,  and  pro- 
ceeded to  cast  about  for  new  markets.  The  American  was 
no  longer  asked  to  act  as  his  factor  in  the  exportation  of 
such  farm  products  as  had  previously  figured  as  a  part  of 
American  imports.  The  Canadian  quest  for  new  markets 
was  successful.  In  due  time  the  export  of  farm  products  to 
the  United  States  dwindled  to  an  insignificant  fraction  of 
the  total  Canadian  export  in  that  line,  and  Canada  became 
a  purchaser  of  American  farm  products  for  her  own  con- 
sumption, nearly  up  to  the  limit  of  her  total  export  of  such 
products  to  the  United  States  in  1866. 

In  the  nu-uiitinie  Canada  maintained  a  wise  and  moder- 
ate tariff  policy  toward  the  United  States.  The  percentage 
of  duty  upon  the  total  value  of  goods  entered  for  consump- 
tion amounted  to  12.25  in  1868,  to  15.98  in  1900,  and  to  16.06 
in  1901.  It  never  rose  above  21.57,  which  was  the  rate  in 
1888.  During  all  the  period  from  1868  to  1901  the  duty  upon 
American  goods  entered  for  consumption  was  less  than  the 
average  duties  upon  the  amount  of  goods  entered  for  con- 
sumption from  all  other  countries;  the  duties  upon  the  total 
American  imports  in  1901  having  amounted  to  no  more  than 
12.05,  while  those  upon  dutiable  imports  were  24.83.  This 
moderate  revenue  tariff  offered  no  obstacle  to  the  liberal 
importation  of  American  goods;  and  while  repressive  Amer- 
ican duties  kept  Canadian  exports  to  the  United  States  at  a 
standstill,  the  Canadian  imports  from  the  United  States 
increased  until  in  1901  they  were  four  times  what  they  were 
in  1866. 

Canada  is  now  the  third  largest  customer  the  United 
States  has  in  the  world;  Great  Britain  and  Germany  taking 
the  precedence.  In  1900  the  total  importation  of  Canada 
from  the  United  States  amounted  to  $116,972,000,  or  $21.65 


n6  SELECTED  ARTICLES 

per  head.  In  the  same  year  the  total  imports  from  the 
United  States  by  Mexico,  Central  America,  South  America, 
and  all  the  West  Indies,  except  Cuba  and  Porto  Rico, 
amounted  to  no  more  than  $96,140,000,  or  $1.70  per  head. 

The  opinion  seems  to  be  held  in  the  United  States  that 
the  trade  conditions  prevailing  in  1866  continue  to-day,  and 
that  Canada  is  still  dependent  upon  the  United  States  for 
a  market  for  her  agricultural  products.  The  sooner  the 
American  learns  that  this  impression  is  utterly  without 
foundation,  the  sooner  will  a  true  appreciation  of  existing 
conditions  be  reached. 

The  following  statement  of  trade  returns  between  the 
United  States  and  Canada,  and  between  Canada  and  other 
countries,  during  the  fiscal  year  ending  June  30,  1901,  will 
afford  the  premises  from  which  to  draw  correct  conclusions. 
These  tables  are  compiled  from  advance  statements  by  the 
Customs  Department  at  Ottawa,  and  may  be  slightly  varied 
upon  careful  revision  for  official  publication: 

Canadian  Trade  with  the  United  States 
Total  imports  from  the  United  States $119,306,000 

Imports  from  the  United  States  for  consumption  110,485,000 

Dutiable  imports  from  the  United  States  for  con- 
sumption    53,600,000 

Free  imports  from  the  United  States  for  con- 
sumption    56,884,000 

Total  exports  to  the  United  States 70,306,000 

Exports  to  the  United  States  ex  foreign  mdse...  67,983,000 

Portion  of  same  coin,  bullion,  gold  dust,  etc 28,486,000 

Actual  export  domestic  produce 39>497,ooo 

Deducting  domestic  produce  exports  from  goods 
entered  for  consumption,  actual  balance  of 

trade  with  the  United  States  against  Canada.  70,988,000 

Canadian    Trade    with   Great   Britain 
Total  imports  from  Great  Britain $43,164,000 


RECIPROCITY  117 

Imports    for    consumption 43,018,000 

Total  exports  to  Great  Britain,  produce  of  Can- 
ada      92,857,000 

Total   exports    105,328,000 

Canadian  Trade  with  All  Other  Countries 
Total  imports  from  all  other  countries $27,945,000 

Imports    for    consumption 27,734,000 

Exports    to    all    other    countries,   the    produce    of 

Canada     16,591,000 

Total   exports    20,753,000 

The  totals  of  free  imports  for  this  year  were:  from  the 
United  States,  $56,884,000,  or  73  per  cent;  from  Great  Bri- 
tain, $11,316,000,  or  17.3  per  cent;  and  from  all  other  coun- 
tries $7,469,000,  or  9.7  per  cent.  The  rates  of  duty  were  as 
follows:  From  all  countries,  entered  for  consumption  16.06, 
dutiable  27.46;  from  the  United  States,  entered  for  con- 
sumption 12.05,  dutiable  24.83;  and  from  Great  Britain,  en- 
tered for  consumption  18.23,  dutiable  24.71.  Out  of  the 
total  of  Canadian  imports  63  per  cent  came  from  the  United 
States,  22*/2  per  cent  from  Great  Britain,  and  14^  per  cent 
from  all  other  countries.  Of  exports  not  including  precious 
metals,  the  United  States  took  21  per  cent,  and  Great  Britain 
53J/2  per  cent. 

It  is  too  early  to  attempt  an  analysis  of  the  Canadian  im- 
port returns  for  1901,  for  the  purpose  of  ascertaining  the 
importation  of  manufactures  for  that  year  by  Canada  from 
the  United  States  and  from  Great  Britain;  but  the  returns 
of  1900  will  serve  the  purpose.  For  that  year  the  Canadian 
imports  of  manufactures  from  the  United  States  and  from 
Great  Britain  were  as  follows:  From  Great  Britain,  value 
of  free  manufactures  $7,610,477,  dutiable  manufactures  $30,- 
377,084;  making  a  total  of  $37,987,561.  From  the  United 
States,  free  manufactures  $18,021,365,  dutiable  manufactures 
$44,837,580;  making  a  total  of  $62,858,945. 

In    1898  the   importation  of  manufactures,   free   and  duti- 


ii8  SELECTED  ARTICLES 

able,  from  Great  Britain  was  $26,732,584,  and  from  the 
United  States  $43,834,769. 

The  importation  of  manufactures  for  1901  as  compared 
with  1900  has  probably  increased  in  the  case  of  the  United 
States,  and  fallen  off  in  the  case  of  Great  Britain,  as  the 
imports  for  consumption  had  risen  from  $109,844,000  to  $no,- 
485,000  in  the  case  of  the  United  States,  and  had  fallen  from 
$44,789,000  to  $43,018,000  in  the  case  of  Great  Britain. 

The  Dominion  possesses  the  great  stretches  of  produc- 
tive soil  upon  this  continent  that  still  remain  unoccupied. 
The  trend  of  the  isothermal  line  to  the  northwest  of  Lake 
Superior  brings  within  the  wheat  belt  a  region  extending 
eight  degrees  northward  from  the  boundary  line,  and  em- 
bracing the  Peace  River  valley.  In  1901  as  many  as  45,000,- 
ooo  bushels  of  wheat  were  produced  in  Manitoba  and  the 
Canadian  Northwest  from  2,000,000  acres  of  land.  There 
are  from  250,000,000  to  450,000,000  acres  more  of  wheat  land 
in  that  country  waiting  to  respond  with  bountiful  harvests 
to  the  invitation  of  the  plough;  and  as  many  as  50,000,000 
inhabitants  may  find  homes  and  subsistence  in  this' part  of 
the  Dominion. 

In  1901  Canada's  trade  in  farm  products  with  Great 
Britain  and  the  United  States  was  as  follows: 

Exports  to  the  United  States 

Agricultural  products,  the  produce  of  Canada....  $2,907,924 
Agricultural  products,  foreign  produce 338,842 


Total     $3,246,766 

Animals  and  their  products,  produce  of  Canada...   $5,331,657 
Animals  and  their  products,  foreign  produce 286,947 


Total    $5,618,606 

Total  export  of  farm  products $8,865,372 

Total   export   of   farm   products,   the   produce   of 

Canada  8,239,581 


RECIPROCITY  119 

Exports  to  Great  Britain 

Agricultural  products,  produce  of  Canada $17,337,675 

Agricultural   products,  foreign 11,502,620 


Total     $28,840,295 

Animals  and  their  products,  produce  of  Canada   . . $49,186,025 
Animals  and  their  products    foreign 500,744 


Total     $49,686,767 

Total  export  of  farm  products $78,527,062 

Total  export,  produce  of  Canada 66,523,700 

Imports  for  Consumption  from  the  United  States 

Agricultural    products    free $14,923,080 

Agricultural    products    dutiable 2,997,202 


Total     $17,920,282 

Animals  and  their  products  free $4,587,785 

Animals  and  their  products  dutiable 2,961,973 


Total     $7,549,758 

Total  imports  •  farm  products $25,470,040 

Portion  of  the  same  free 19,510,865 

Imports  from   all   other   Countries,  including   Great  Britain 

Agricultural   products   free $687,626 

Agricultural  products   dutiable 531,904 


Total    $1,219,520 

Animals  and  their  products  free $3,429,356 

Animals  and  products  dutiable 100,950 


Total  animals   and  products $3,53O,3o6 

Total    farm    products $4,749,826 


120  SELECTED  ARTICLES 

Of  the  $63,000,000  of  manufactures  purchased  by  Canada 
from  the  United  States  in  1900,  Canadian  farmers  purchased 
quite  $30,000,000.     They  were  permitted  in  return  to  project 
a   dole   of  $8,239,000  of  farm  products   over   the   tariff  wall 
of  the  United  States,  and  to  see  brought  into  Canada  from 
the  United  States,  free  of  duty,  hides  and  skins  to  the  value 
of  $2,432,000,  wool  $398,000,  horses  $90,000,  broom  corn  $209,- 
ooo,  hemp  $291,000,  Indian  corn  $6,484,000,  flaxseed  $662,200, 
tobacco    leaf    $1,720,000,    raw    cotton    $4,731,000,    and    some 
other   articles    of   less    value;    making   a    total    of    free    farm 
products    imported    from    the    United    States    amounting    to 
$19,500,000.     Naturally,  the   farmer   thinks   some   kind  of  re- 
adjustment would   be  proper;   and  he  will  take  very  kindly 
to  the  suggestion  that  it  would  be  better  to  have  the  goods 
manufactured  in  places  where  he  could  furnish  the  operatives 
with    the    food    they    consume,    and    with    some    of    the    raw 
materials  required  in  the  production.     Of  the  farm  products 
upon  the  export  and  import  list,  Canada  bought  of  the  Unit- 
ed States  to  the  extent  of  $24,058,000  in  excess  of  her  sales 
to  that  country,  while  the  United  States  bought  of  Canada, 
in  excess  of  her  sales  to   that  country,   the  following  farm 
products,    for    consumption:    Corn,    oats,    rye,    wheat,    corn- 
meal,  oatmeal,  rye  and  wheat  flour,  malt,  seeds,  apples,  small 
fruits,  potatoes,  vegetables,  tobacco  leaf,  broom  corn,  hemp, 
flaxseed,  horses,  hogs,  poultry,  eggs,  butter,  lard,  bacon  and 
hams,   beef  salted   in   barrels,   pork   in   barrels,   other  meats, 
'  grease,  hides  and  skins,  wool,  and  many  minor  articles. 

Some  of  the  facts  above  set  forth  may  be  briefly  sum- 
marized as  follows:  (i)  The  Canadian  tariff  rates  are  less 
than  one-half  those  of  the  United  States.  (2)  The  Canadian 
exports  of  farm  products  to  the  United  States  are  only  one- 
third  as  much  as  in  1866.  (3)  Canadian  imports  from  the 
United  States  are  now  over  four  times  what  they  were  in 
1866.  (4)  Canadian  imports  from  Great  Britain  have  in- 
creased less  than  ten  per  cent  since  1866.  (5)  Canadian  ex- 
ports of  farm  products  to  Great  Britain  have  increased 
twenty-fold  since  1866.  (6)  Canada  buys  three  times  as 
much  from  the  United  States  as  she  sells  to  that  country, 


RECIPROCITY  i2i 

leaving  out  of  account  the  precious  metals.  (7)  Without  in- 
cluding raw  cotton,  Canada  buys  from  the  United  States 
two  and  a  half  times  the  amount  of  farm  products  that  she 
sells  to  that  country.  (8)  Canada  buys  at  least  $10,000,000 
more  manufactures  from  the  United  States  than  from  all 
the  rest  of  the  world.  (9)  Canada  finds  her  chief  market  for 
farm  products  in  Great  Britain.  (10)  Of  the  total  imports 
of  Canada  sixty-three  per  cent  comes  from  the  United 
States,  (n)  Canada  gives  the  United  States  a  free  list  of 
$56,884,000,  or  seventy-three  per  cent  of  her  entire  free  list. 
Included  in  the  free  list  from  the  United  States  are  $39,000,- 
ooo  of  free  farm  products,  free  forest  products,  and  free 
manufacture's.  (12)  Canada  receives  practically  no  free  list 
from  the  United  States,  except  the  precious  metals. 

Canada  cannot  afford  to  continue  the  present  state  of 
trade-  relations  with  the  United  States.  They  do  not  serve 
to  pn»iii<>u>  her  prosperity.  Her  purchases  from  the  United 
States  mu>t  be  paid  for,  in  a  large  part,  from  the  proceeds 
of  sales  of  her  products  to  other  countries.  If  she  is  to  be 
a  hewer  of  wood  and  drawer  of  water,  she  wants  at  least 
the  privilege  of  selling  the  wood.  The  United  States  can 
easily  give  to  her  a  kind  of  reciprocity  that  will  put  matters 
upon  the  proper  basis,  by  enabling  her  to  sell  her  products 
in  the  markets  of  the  United  States  to  an  amount  somewhat 
approaching  the  extent  of  her  purchases  from  that  country. 
Failing  to  secure  this  arrangement, •  Canada  can  give  to  the 
United  States  a  kind  of  reciprocity  that  will  make  the  vol- 
ume of  imports  from  that  country  nearly  as  lean  and  hungry 
as  is  the  present  scale  of  exportation  to  it.  The  simple 
formula  for  securing  this  result  is  to  adopt  the  American 
tariff;  and  Canada  is  rapidly  settling  down  to  the  conviction 
that  there  should  be  no  unnecessary  delay  in  taking  this 
course,  if  proper  concessions  cannot  be  obtained. 

The  supply  of  raw  material  for  paper-making  has  become 
a  matter  of  much  importance  to  the  paper  mills  of  the  Unit- 
ed States.  Canada  possesses  a  great  reserve  of  spruce  tim- 
ber suited  to  that  use.  Her  public  men  fully  appreciate  the 
importance  of  such  a  possession.  No  obstacle  has  yet  been 


122  SELECTED  ARTICLES 

placed  in  the  way  of  the  exportation  of  pulp  wood;  but  it 
would  be  natural,  in  a  possible  movement  for  reciprocity  of 
tariffs,  to  require  the  manufacture  of  Canadian  pulp  wood 
into  paper  in  Canada.  This  course  would  very  likely  be 
taken,  as  has  already  been  the  case  with  saw-logs  and  lum- 
ber manufacture. 

The  change  in  the  fiscal  relations  of  the  two  countries 
that  would  form  a  reasonable  and  proper  basis  of  adjust- 
ment would  be  to  make  the  natural  products  of  the  farm, 
the  forest,  the  mine,  and  the  sea  reciprocally  free,  and  to 
provide  that  Canada  should  not  discriminate  in  her  tariff 
rates  in  favor  of  other  countries.  At  first  sight  this  may 
seem  rather  a  sweeping  proposition.  The  lumberman  who 
wants  to  hasten  the  extinction  of  the  American  forests,  and 
the  farmer  who  has  the  faith,  born  of  ignorance  of  the  facts, 
that  the  small  Canadian  surplus  of  farm  products  thai  might 
find  a  market  for  consumption  in  the  United  States  would 
swamp  the  vast  production  of  that  country,  will  loudly  pro- 
test. This  proposal,  however,  for  reciprocally  free  natural 
products  will  be  found,  upon  examination,  a  reasonable  one. 
It  must  be  borne  in  mind  at  the  outset  as  before,  stated,  that 
Canada  consumes  farm  products  from  America  amounting 
to  two  and  a  half  times  the  total  of  her  own  export  of 
farm  products  to  that  country.  Free  trade  would  greatly 
stimulate  this  consumption;  for,  with  the  exception  of  In- 
dian corn,  all  the  cereals,  flour,  meal,  fruits,  animals,  butter, 
cheese,  lard,  eggs,  meats  of  various  kinds,  seeds,  potatoes, 
vegetables,  etc.,  pay,  when  imported  into  Canada,  duties 
nearly  or  quite  equal  to  those  levied  upon  similar  articles 
by  the  United  States.  Under  free  trade  British  Columbia 
and  the  Klondike  region  would  buy  their  food  supplies  from 
Washington  and  Oregon.  The  Maritime  Provinces — Nova 
Scotia,  New  Brunswick,  and  Prince  Edward  Island — with  a 
population  of  925,000,  would  buy  their  food  supplies  from 
cities  upon  the  American  seaboard.  Ontario  and  Quebec 
would  buy  largely  of  Indian  corn,  as  at  present,  together 
with  increased  quantities  of  coarse  grains,  flour,  pork,  and 
meats  for  the  use  of  men  engaged  in  lumbering  and  mining 
operations. 


RECIPROCITY  123 

It  is  not  improbable  that  Canadian  purchases  of  farm 
products  would  still  exceed  Canadian  sales  for  consumption 
in  the  same  lines  to  the  United  States,  and  it  4is  certain  that 
the  balance  against  the  United  States  would  not  be  large  in 
this  interchange  of  farm  products.  It  is  not  probable  that 
the  Canadian  export  of  such  products  would  be  more  than 
six  times  as  great  as  at  present,  or  more  than  double  the 
export  under  the  stimulus  of  war  demand  and  impending 
reciprocity  abrogation  in  1866,  or  in  round  numbers,  say, 
$50,000,000.  It  is  also  likely  that,  under  the  stimulus  of  free 
admission,  the  Canadian  imports  of  farm  products,  amount- 
ing in  1901,  without  raw  cotton,  to  $20,737,000,  would  be 
doubled,  which  would  leave  a  balance  of  about  $8,000,000  be- 
tween export  and  import  of  farm  products.  The  exports  of 
forest  products,  amounting  in  1901  to  $12,205,000,  and  of 
mine  products,  amounting  to  $38,501,000,  which  included 
$26,824,000  of  gold  dust,  nuggets,  gold-bearing  quartz,  and 
.silver  concentrates,  would  be  increased;  but  the  total  in- 
crease in  the  export  of  all  lines  of  natural  products  would' 
hardly  amount  to  a  sum  equal  to  three-fifths  of  the  actual 
American  balance  of  trade  against  Canada  last  year.  In 
the  meantime  the  general  stimulus  to  trade,  resulting  from 
making  natural  products  free,  would  largely  increase  the 
Canadian  importation  of  American  manufactures  and  other 
commodities;  and  it  is  certain  that  under  the  proposed  new 
arrangement  the  United  States  would  continue  to  score 
large  annual  balances  of  trade  against  Canada. 

In  the  case  of  all  articles  of  farm  produce,  of  which  the 
United  States  and  Canada  have  a  considerable  surplus  for 
sale  in  Great  Britain  and  other  foreign  markets,  free  trade 
between  the  two  countries  would  have  little  effect  upon 
prices.  This  would  apply  to  wheat,  flour,  bacon,  hams, 
pork  in  barrels,  cheese,  etc.  The  Canadian  producer  might 
benefit,  to  a  limited  extent,  through  competition  between 
American  and  Canadian  buyers  in  his  own  market,  because 
rings  and  combinations  of  buyers  would  be  more  difficult  to 
establish  and  maintain  than  if  the  American  buyer  were  ex- 
cluded. In  the  case  of  articles  exported  to  the  United  States 


124  SELECTED  ARTICLES 

for  consumption,  free  trade  would  have  no  appreciable  effect 
upon  prices,  because  of  the  insignificant  amount  of  importa- 
tion compared  with  the  great  volume  of  production  in  the 
United  States.  In  the  case  of  sawn  lumber  the  importation 
into  the  United  States  from  Canada,  for  consumption, 
amounted  last  year  to  about  500,000,000  feet,  board  measure, 
which  was  less  than  one  and  a  half  per  cent  of  the  quantity 
of  lumber  manufactured  in  the  United  States.  To  assert 
that  one  and  half  per  cent  will  depress  ninety-eight  and  a 
half  per  cent  to  the  extent  of  the  duty,  or  will  even  affect 
prices  in  any  material  degree,  is  absurd. 

This  view  of  the  case  was  placed  before  the  American 
members  of  the  Trade  Committee,  when  the  Joint  High 
Commission  met  in  1898;  and  the  Hon.  Nelson  Dingley  free- 
ly admitted  that  American  lumber  prices  could  not  be  ap- 
preciably affected  by  the  importation  of  Canadian  lumber 
free  of  duty,  with  the  amount  then  imported,  or  likely  to  be 
imported.  The  same  conditions  would  hold  good  with  re- 
gard to  eggs,  barley,  vegetables,  potatoes,  cheese,  butter, 
and  other  articles  of  farm  produce  likely  to  be  exported 
from  Canada  to  the  United  States  for  consumption.  The 
disparity  between  the  volume  of  importation  and  that  of 
domestic  production  would  be  even  greater  in  the  case  oi 
these  articles  than  in  the  case  of  lumber,  and  free  trade  could 
not  to  any  material  extent  affect  prices.  The  Canadian  lum- 
berman and  farmer  desife  free  access  to  the  American  mar- 
ket, but  not  for  the  purpose  of  depressing  prices  in  that* 
country  to  the  present  level  of  prices  in  Canada,  where  dif- 
ference of  price  exists,  because  that  would  do  them  no  good. 
Their  desire  for  free  trade  arises  from  the  expectation  that! 
the  Canadian  price  will  be  increased  to  the  extent  of  the  duty 
when  the  latter  is  removed.  In  the  case  of  failure  of  a 

crop,  or   great   scarcity  of   any  article,   free   trade   might   in 
exceptional  cases  relieve  the  strain  and  affect  prices,  to  the 

benefit  of  all  classes,  in  either  country. 

Absolute  free  trade  has  existed  between  all  the  states  of 

the    American    Union    since    the    Constitution    was    adopted. 

Its    operation    has    been    entirely    satisfactory.     It    has    fur- 


RECIPROCITY  125 

nished  the  most  absolute  vindication  of  the  wisdom  of  dis- 
pensing with  tariff  restrictions.  Between  different  states 
and  different  groups  of  states,  great  diversity  of  soil,  cli- 
mate, production  and  general  conditions  have  always  ex- 
isted. These  differences  are  as  great  as  those  dividing  the 
Canadian  Provinces  and  Territories  from  the  American 
Union.  The  logical  application  of  the  principle  of  protec- 
tion would  have  called  for  duties  upon  the  agricultural  prod- 
ucts of  the  fertile  West,  in  behalf  of  the  farming  interests 
of  the  less-favored  New  England  and  Middle  States;  and 
also  for  duties  upon  the  goods  produced  in  the  well-estab-' 
lished  manufacturing  plants  of  the  Eastern  States,  in  favor 
of  the  new  and  struggling  industries  of  the  Mississippi  val- 
ley and  the  Pacific  slope. 

The  assertion  that  such  a  policy  would  have  promoted  the 
welfare  and  prosperity  of  the  Union  would  be  absurd.  The 
humblest  citizen  knows  that,  with  every  extension  of  the 
area  over  which  the  system  of  free  interstate  commerce  pre- 
vails, the  more  apparent  become  the  advantages  conferred  by 
that  system.  The  nearer  the  approach  to  this  system  in 
the  trade  policy  of  the  United  States  and  Canada,  the  better 
for  both  countries;  for  similar  results  to  those  that  have 
followed  the  application  of  the  system  of  free  trade  in  the 
United  States  would  follow  its  application  to  the  great 
Canadian  domain.  A  Zollverein  would  perhaps  be  the  truly 
scientific  and  effectual  method;  but  years  of  trade  repression 
and  business  estrangement  and  the  development  of  a  vast' 
export  trade  with  the  Motherland  make  this  an  unattainable 
arrangement  at  the  present  time.  Free  trade  in  natural  prod- 
ucts and  moderate  revenue  duties  upon  a  reasonable  sched- 
ule of  finished  products,  as  at  present  in  Canada,  with  ap- 
plication of  the  most-favored-nation  treatment  by  each 
country  to  the  other,  will  prove  infinitely  more  satisfactory 
than  present  conditions,  and  will  naturally  lead  up  to  such 
further  developments  as  will  accord  with  the  wishes  and 
the  interests  of  both  countries. 

The  opening  of  the  nineteenth  century  found  North 
America  inhabited  by  5,500,000  English-speaking  people.  At 


126  SELECTED  ARTICLES 

the  close  of  the  century  the  number  had  increased  to  80,000,- 
ooo;  and  an  area  of  7,000,000  square  miles,  rich  in  all  resourc- 
es that  the  most  advanced  form  of  civilization  requires,  is 
now  the  heritage  of  the  American  Anglo-Saxon.  The  his- 
tory of  the  last  hundred  years  is  a  glorious  record  of  prog- 
ress and  expansion  for  these  peoples.  The  United  States 
has  suddenly  stepped  to  the  front  as  a  great  world  power, 
and  will  be  content  with  nothing  short  of  the  foremost 
manufacturing,  commercial,  and.  naval  position.  The  world 
is  respectfully  taking  the  measure  of  the  new  Colossus,  and 
forgets  to  indulge  in  the  old-time  criticisms  about  swagger, 
rawness,  and  self-assertion.  The  portals  of  the  twentieth 
century  have  opened,  and  down  the  vista  of  its  one  hun- 
dred eventful  years  to  come  there  looms  the  shadowy,  half- 
defined,  half-concealed  revelation  of  mighty  achievements 
and  illimitable  accretions  of  force.  While  this  great  power 
commands  the  attention  of  the  world,  a  .younger  member 
of  the  galaxy  of  Anglo-Saxon  commonwealths  is  rounding 
into  national  life,  and  has  laid  wisely  the  foundations  of  its 
political  structure,  adhering  closely  to  the  structure  and 
spirit  of  the  form  of  government  that  has  been  shaped  in 
the  furnace  of  conflicts,  and  evolved  from  contact  with  dif- 
ficulties and  by  the  application  of  the  lessons  learned  during 
a  thousand  years.  Experience  shows  that  the  British  model 
will  well  serve  the  purpose  of  Canada.  The  young  nation  is 
taking  stock  of  its  immense  resources,  and  looking  forward 
to  the  day  when  its  people  will  number  a  hundred  millions. 
The  future  of  these  two  great  commonwealths  upon  the 
American  continent  is  a  matter  of  great  importance  to  the 
world,  and  of  greater  importance  to  themselves.  It  will  be 
a  great  disaster  if  the  policy  of  the  last  thirty-five  years  is 
continued  by  the  United  States,  with  the  probable  result 
of  being  imitated  by  Canada.  Let  us  hope  rather  that  the 
American  policy  of  free  trade  within  the  Union  will  be 
imitated  as  far  as  may  be  permitted  by  circumstances,  and 
may  be  consistent  with  the  preservation  of  separate  na- 
tional autonomy,  and  that  provision  will  speedily  be  made 
for  the  development  of  a  vast  and  mutually  advantageous 


RECIPROCITY  127 

commerce,  for  the  growth  of  friendly  relations,  and  for  the 
securing  of  a  permanent  peace. 

Journal  of  Political  Economy.  19:  527-41.  July,  1911. 
International  Aspects  of  Reciprocity.     H.   P.  Willis. 

President  Taft  in  his  message  to  Congress  January  26, 
1911,  states  with  the  utmost  cogency  the  general  reasons 
which  call  for  a  closer  commercial  union  between  the  Unit- 
ed States  and  Canada.  His  exposition  of  the  broad  and 
statesmanlike  considerations  which  should  control  the  ac- 
tion of  the  two  countries  in  this  matter  leaves  little  to  be 
added.  The  technical  effects  of  given  changes  in  duty  have 
been  fully  treated  by  competent  authorities.  It  seems  to 
me  that  the  advantages  to  both  countries  certain  to  flow 
from  the  operation  of  the  agreement  are  of  so  evident  and 
considerable  a  nature  as  to  make  the  desirability  of  its 
adoption  unmistakable.  I  think  it  should  be  passed  by  the 
Senate  without  further  delay,  and  that  when  it  has  been  so 
adopted  it  will  constitute  one  of  the  most  creditable  acts  of 
the  present  administration.  I  believe  in  the  agreement  not 
because  it  is  perfect  or  even  satisfactory  in  its  scope,  but 
because  it  is  a  step  toward  the  establishment  of  those 
equitable  trade  relations  with  Canada  which  can  be  reached 
only  by  a  very  marked  reduction,  if  not  actual  abolition,  of 
tariff  restrictions  upon  the  mutual  interchange  of  commodi- 
ties. 

There  is  another  aspect  of  the  Canadian  agreement, 
however,  in  which  it  constitutes  a  striking  innovation  upon 
past  and  present  commercial  policy,  and  which  suggests  the 
acceptance  of  a  new  attitude  toward  foreign  countries  more 
in  harmony  with  existing  conditions  than  the  exclusive  inter- 
national position  heretofore  accepted  by  the  United  States. 
This,  to  my  mind,  transcends  all  other  considerations  in 
favor  of  reciprocity.  The  reciprocity  agreement,  if  adopted, 
will  without  doubt  be  an  important  step  toward  the  revision 
of  our  system  of  tariff  treaties. 


128  SELECTED  ARTICLES 

The  international  tariff  position  of  the  United  States  is 
today  dependent  upon  two  important  factors:  (i)  the  most- 
favored-nation  clause  in  our  commercial  treaties;  (2)  the 
present  maximum  and  minimum  tariff  provision  of  the 
Payne-Aldrich  Act.  If  we  add  to  the  problem  a  new  fac- 
tor, (3)  the  reciprocity  provision  now  proposed  with  Canada, 
how  will  it  affect  the  operation  of  the  other  two  elements? 

The  position  of  the  United  States  as  respects  the  most- 
favored-nation  clause  is  the  product  of  a  long  period  of 
development  and  is  now  absolutely  anomalous.  Early  com- 
mercial treaties  were  arranged  by  European  nations  in  strict 
accordance  with  the  idea  that  every  concession  granted  by 
one  country  to  any  other  should  be  given  only  in  exchange 
for  similar  concessions  in  return.  In  other  words,  the  ne- 
gotiation of  commercial  treaties  was  a  sort  of  bargaining 
process  in  which  a  foreign  nation  might  be  overreached  by 
its  antagonist.  The  object  to  be  kept  in  mind  by  either 
party  was  the  arrangement  of  an  agreement  as  favorable 
to  it  as  circumstances,  and  the  relative  acuteness  of  the 
other,  would  allow.  It  is  evident  that,  supposing  two  na- 
tions, A  and  B,  to  have  signed  a  commercial  treaty  granting 
certain  privileges  by  mutual  agreement,  B  might  be  at  a  con- 
siderable advantage  with  respect  to  a  third  nation,  C,  in 
competing  for  the  trade  of  A.  If,  subsequently,  an  agree- 
ment should  be  entered  into  between  A  and  C,  whereby 
more  elaborate  concessions  were  allowed  C  than  those 
which  had  been  gained  by  B,  it  might  turn  out  that  B  would 
not  merely  be  outstripped  by  C  in  the  competition,  but 
would  even  be  worse  off  than  would  have  been  the  case 
had  no  treaty  been  originally  negotiated  with  A.  It  was 
this  situation  which  led  to  the  development  of  the  most- 
favored-nation  clause.  Under  it,  states  sought  to  obtain 
guarantees  that  in  case  future  commercial  concessions  should 
be  offered  to  their  competitors,  they  themselves  would,  ipso 
facto,  enjoy  the  same  concessions.  Thus,  if  the  two  nations, 
A  and  B,  had  entered  into  a  commercial  agreement  in  which 
the  most-favored-nation  stipulation  has  been  incorporated, 
and  if  there  should  be  any  subsequent  treaty  between  A  and 


RECIPROCITY  129 

C,  in  which  larger  concessions  were  granted,  C  would,  by 
the  nature  of  the  case,  extend  those  concessions  also  to  B. 
Now,  it  is  clear  that  the  interpretation  to  be  placed  upon 
the  clause  might  be  such  as  to  extend  those  concessions  to  B 
only  in  case  B  should  pay  for  them  by  the  same  return  con- 
cessions granted  by  C,  or  should  simply  be  permitted  to 
enjoy  them  without  any  further  payment  than  that  already 
arranged  for  in  the  original  A  and  B  treaty. 

Writers  on  international  law  distinguish  several  different 
forms  of  the  "most-favored-nation  clause/'  They  enumerate 
more  particularly  the  so-called  "simply  reciprocal  form"  and 
the  so-called  "imperative  and  unconditional  form."  In  the 
first,  "where  reciprocity  is  the  foundation  of  every  clause  in 
the  treaty  dealing  with  the  subject  of  commerce  and  navi- 
gation, the  inference  points  to  reciprocity  as  the  foundation 
for  the  general  covering  clause  which  is  to  supply  omissions 
and  prevent  future  unfavorable  discrimination."  Under  the 
other  interpretation,  the  commercial  favors  are  granted  to 
all  countries  under  the  most-favored-nation  clause  "imme- 
diately and  without  condition";  in  other  words,  without  com- 
pensating privileges  offered  in  return.  It  is  easy  to  see  why 
nations  like  Great  Britain,  which  have  adopted  free  trade 
heir  policy  and  which  have,  as  a  matter  of  fact,  nothing 
to  offer  in  return  for  a  reduction  of  duties,  are  disposed  to 
insi.st  strenuously  upon  this  second  interpretation. 

The  "simply  reciprocal  form"  of  the  most-favored-na- 
tion clause  is,  of  course,  the  one  to  which  the  United  States 
has  consistently  held.  It  has,  from  the  beginning,  adhered 
rigidly  to  the  view  that  trade  concessions  offered  by  it  to 
some  other  country  need  not  become  common  to  a  third 
country  with  which  we  have  no  treaty  relations  involving 
the  most-favored-nation  clause,  unless  that  third  nation 
should  meet  us  on  our  own  ground  by  granting  the  same 
favors  that  we  secured  at  the  hands  of  the  other  nations 
with  which  we  had  entered  into  treaty  relations.  In  the 
treaty  negotiated  between  the  United  States  and  France, 
February  6,  1778,  the  following  words  occur: 

The  most  Christian  King  and  the  United  States  engage  mu- 
tually to  grant  any  particular  favor  to  other  nations  in  respect 


130  SELECTED  ARTICLES 

to  commerce  and  navigation  which  shall  not  immediately  be- 
come common  to  the  other  party,  who  shall  enjoy  the  same 
favor  freely,  if  the  concession  was  freely  made  or  on  allowing 
the  same  compensation  if  the  concession  was  conditional. 

In  Art.  IX  of  the  treaty  with  Prussia,  in  1828,  and  in 
Art.  IX  of  the  treaty  with  Austria,  in  1829,  occur  the  words: 

If  either  party  shall  hereafter  grant  to  any  other  nation  any 
particular  favor  in  navigation  or  commerce,  it  shall  immediately 
become  common  to  the  other  party,  freely,  where  it  is  freely 
granted  to  such  other  nation,  or  on  yielding  the  same  compensa- 
tion, when  the  grant  is  conditional. 

On  the  other  hand,  European  diplomacy  has  developed 
the  most-favored-nation  clause  along  a  different  line,  fol- 
lowing the  second  of  the  two  interpretations  already  referred 
to.  As  things  now  stand,  most  European  countries  admit 
that  nations  which  have  granted  to  other  nations  the  bene- 
fits of  the  most-favored-nation  clause  have  guaranteed  to 
the  latter  that  their  commercial  relation  shall  not  be  less 
favorable  with  the  guarantors  than  shall  those  of  any  other 
country.  In  other  words,  new  and  more  extensive  trade 
concessions  granted  by  country  A  to  C,  a  third  nation,  are, 
ipso  facto,  extended  to  B,  a  second  nation,  with  which  it 
has  originally  entered  into  commercial  relations,  while  B 
obtains  these  advantages  without  compensation  even  though 
they  may  have  been  paid  for  very  heavily  by  C.  This,  of 
course,  is  a  marked  reversal  of  the  original  interpretation 
given  to  the  "most-favored-nation  clause"  during  the  eigh- 
teenth and  first  half  of  the  nineteenth  century.  It  is  a  most 
important  point  to  bear  in  mind,  in  studying  the  develop- 
ment of  reciprocity  as  a  policy,  for  it  will  readily  be  seen 
that  the  adoption  of  the  European  interpretation  of  the 
most-favored-nation  clause  implies  either  the  giving  up  of 
all  commercial  treaties,  or  else  the  conscious  recognition  of 
tariff  reduction  as  a  system  to  be  regularly  applied  when- 
ever granted  in  an  individual  case.  Reciprocity,  when  lim- 
ited to  isolated  bargaining,  which  may  or  may  not  be  under- 
taken, as  circumstances  of  the  particular  case  seem  to  indi- 
cate. 

It  is  apparent  that  the  United  States  in  maintaining  its 
own  interpretation  of  this  clause,  reserving  the  right  to 
grant  tariff  concessions  only  in  return  for  certain  other  con- 
cessions and  the  right  to  decide  whether  concessions  offered 


RECIPROCITY  131 

by  other  countries  are  equivalent  to  those  obtained  from 
any  particular  country,  occupies  a  peculiar  and  anomalous 
position  as  compared  with  a  group  of  nations  adhering  to  a 
different  interpretation  and  granting  to  us  the  advantages  of 
the  clause,  which  we,  however,  deny  to  them.  All  of  this 
has  led  to  exceedingly  unfavorable  comment  on  the  part 
of  European  countries,  which  regard  our  attitude  on  the 
subject  of  the  most-favored-nation  clause  as  characteris- 
tically selfish. 

We  can  better  understand  the  application  of  this  inter- 
pretation of  the  most-favored-nation  clause  by  considering 
the  precise  details  of  the  instructions  given  to  our  diplo- 
matic representatives  on  some  critical  occasions.  These  are 
fully  set  forth  in  Foreign  Relations,  but  Secretary  Knox 
has  lately  sent  to  the  Senate  a  useful  compilation  of  prece- 
dents from  which  a  few  may  be  chosen. 

The  treaty  of  April  30,  1803,  for  the  cession  of  Louisiana 
provided,  in  Art.  VIII,  that  "the  ships  of  France  shall  be 
treated  upon  the  footing  of  the  most-favored-nations"  in  the 
ports  of  the  ceded  territory.  By  act  of  Congress  of  March 
3,  1815,  the  vessels  of  foreign  countries  were  exempted 
from  discriminating  tonnage  duties  in  the  ports  of  the  Unit- 
ed States,  provided  that  such  countries  granted  reciprocal 
treatment  to  American  ships  in  their  ports.  Great  Britain 
took  advantage  of  this  offer  of  reciprocity  and  removed  her 
discriminating  duties  against  American  shipping.  France, 
however,  took  no  action,  with  the  result  that  French  ves- 
sels continued  to  pay  discriminating  duties  when  entering 
United  States  ports,  while  British  vessels  were  exempt.  The 
French  minister,  in  a  note  to  the  Department  of  State,  under 
elate  of  December  15,  1817,  claimed  that  the  exemption 
granted  to  British  shipping  should  likewise  be  extended  to 
French  shipping  by  virtue  of  Art.  VIII  of  the  treaty  of  1803. 

Secretary  of  State  John  Quincy  Adams,  in  his  reply  of 
December  23,  1817  (American  State  Papers,  For.  Rel.,  V, 
'5--53)»  defined  the  position  of  the  United  States  as  follows: 

The  undersigned  is  instructed  to  say  that  the  vessels  of  France 
are  treated,  in  the  ports  of  Louisiana,  upon  the  footing  of  the 
most-favored  nation,  and  that  neither  the  English  nor  any  other 


132  SELECTED  ARTICLES 

foreign  nation  enjoys  any  gratuitous  advantage  there  which  is 
not  equally  enjoyed  by  France.  But  English  vessels,  by  virtue  of 
a  conditional  compact,  are  admitted  into  the  ports  of  the  United 
States,  including  those  of  Louisiana,  upon  payment  of  the  same 
duties  as  the  vessels  of  the  United  States.  The  condition  upon 
which  they  enjoy  this  advantage  is,  that  the  vessels  of  the 
United  States  shall  be  admitted  into  the  ports  of  Great  Britain 
upon  payment  of  the  same  duties  as  are  there  paid  by  British 
vessels. 

The  eighth  article  of  the  treaty  of  cession  stipulates  that 
the  ships  of  France  shall  be  treated  upon  the  footing  of  the 
most-favored  nations  in  the  ports  of  the  ceded  territory;  but 
it  does  not  say,  and  cannot  be  understood  to  mean,  that  France 
should  enjoy  as  a  free  gift  that  which  is  conceded  to  other  na- 
tions as  a  full  equivalent. 

It  is  obvious  that  if  French  vessels  should  be  admitted  into 
ports  of  Louisiana  upon  the  payment  of  the  same  duties  as  the 
vessels  of  the  United  States,  they  would  be  treated,  not  upon 
the  footing  of  the  most-favored  nation,  according  to  the  article 
in  question,  but  upon  a  footing  more  favored  than  any  other 
nation;  since  other  nations,  with  the  exception  of  England,  pay 
higher  tonnage  duties,  and  the  exemption  of  English  vessels  is 
not  a  free  gift,  but  a  purchase  at  a  fair  and  equal  price. 

It  is  true  that  the  terms  of  the  eighth  article  are  positive 
and  unconditional;  but  it  will  readily  be  perceived  that  the  con- 
dition, though  not  expressed  in  the  article,  is  inherent  in  the 
advantage  claimed  under  it.  If  British  vessels  enjoyed,  in  the 
ports  of  Louisiana,  any  gratuitous  favor,  undoubtedly  French 
vessels  would,  by  the  terms  of  the  article,  be  entitled  to  the  same. 

During  the  negotiations  between  the  governments  of 
the  United  States  and  Great  Britain  which  resulted  in  our 
reciprocity  treaty  of  1854  with  Canada,  Mr.  Crapton,  the 
British  charge  d'affaires  at  Washington,  under  instructions  from 
his  government,  wrote  to  Secretary  of  State  Clayton,  as  follows : 

It  has  been  objected  that,  if  certain  agricultural  articles  (more 
particularly  wheat),  the  production  of  Canada,  were  to  be  ad- 
mitted free  of  duty  into  the  United  States,  under  a  convention 
with  the  British  government  for  a  reciprocal  free  trade  between 
that  province  and  the  United  States  in  such  productions,  the 
like  productions  of  other  nations  having  "reciprocity  treaties"  of 
commerce  with  the  United  States  must  be  admitted  on  the  same 
terms. 

To  this  it  may  be  replied  that  no  nation  could  claim  for  itself 
an  advantage  under  a  convention  between  Great  Britain  and  the 
United  States,  which  Great  Britain  herself  had  not  obtained  un- 
der that  convention.  Had  any  other  nation  a  colony  similarly 
situated,  she  might  then  be  borne  out  in  claiming  that  such 
colony  should  be  equally  favored;  otherwise  not. 

The  reciprocity  convention  concluded  between  the  United 
States  and  the  Hawaiian  Islands  on  January  30,  1875  (effec- 
tive September  9,  1876),  provided,  in  Art  IV,  that  the  Ha- 
waiian Islands  should  not,  so  long  as  the  treaty  remained  in 
force,  "make  any  treaty  by  which  any  other  nation  shall 
obtain  the  same  privileges,  relative  to  the  admission  of  any 


RECIPROCITY  133 

article  free  of  duty,  hereby  secured  to  the  United  States/' 

Invoking  the  most-favored-nation  clause  in  Art.  IV  of 
her  treaty  with  the  Hawaiian  Islands,  Great  Britain  demand- 
ed that  the  latter  should  extend,  gratuitously,  to  the  United 
Kingdom  the  tariff  concessions  granted  in  reciprocity  to  the 
United  States. 

The  position  of  the  United  States  government  in  this 
matter  was  set  forth  in  a  note  from  Mr.  Comly,  American 
minister  at  Honolulu,  dated  July  I,  1878,  to  the  Hawaiian 
foreign  office,  reading  in  part  as  follows  (For.  Rel.,  1878,  404)  : 
No  treaty  in  existence  at  the  time  this  compact  was  entered 
into  secured  to  any  other  nation  the  privileges  as  to  the  admis- 
sion of  certain  articles  free  of  duty,  which  have  been  guaranteed 
to  the  United  States  by  this  treaty.  These  privileges  were 
secured,  not  through  any  general  treaty  rights  or  stipulations, 
but  by  giving  certain  valuable  considerations  in  a  special  treaty 
of  reciprocal  covenants.  The  concession  of  these  privileges  to 
the  United  States  cannot,  therefore,  form  any  just  basis  for  a 
claim  to  like  privileges  by  any  other  nation,  under  the  parity 
clause  of  any  ordinary  form  of  treaty.  The  uttermost  that  might 
be  conceded  under  such  parity  clause  would  be  the  claim  to  pur- 
chase the  same  immunities  through  special  treaty,  upon  like 
terms  with  those  agreed  upon  between  the.  United  States  and 
the  H;i\\  aiinn  Islands. 

Sec.  608  of  the  United  States  tariff  act  of  1894  placed  salt 
upon  the  free  list,  but  provided  that  if  salt  should  be  import- 
ed from  any  country  that  imposed  a  duty  upon  salt  im- 
ported from  the  United  States  there  should  be  levied  on  the 
salt  of  such  country  the  rate  of  duty  existing  prior  to  the 
passage  of  the  tariff  act.  Notwithstanding  that  American 
salt  was  dutiable  on  importation  into  Germany,  the  Ger- 
man government  demanded  free  entry  of  German  salt  into 
the  United  States  by  virtue  of  the  most-favored-nation  clause 
(Arts.  V  and  IX)  of  the  treaty  of  1828  between  the  United 
States  and  Prussia.  The  question  having  been  submitted 
to  Attorney-General  Olney,  he  gave  an  exhaustive  opinion, 
muter  date  of  November  13,  1894,  in  which  he  said: 

The  most-favored-nation  clauses  of  our  treaties  with  foreign 
powers  have  from  the  foundation  of  the  government  been  in- 
variably construed  both  as  not  forbidding  any  internal  regula- 
tions necessary  for  the  protection  of  our  home  industries  and  as 
permitted  commercial  concessions  to  a  country  which  are  not 
gratuitous,  but  are  in  return  for  equivalent  concessions,  and  to 
which  no  other  country  is  entitled  except  upon  rendering  the 
same  equivalents.  Thus,  Mr.  Jefferson,  when  Secretary  of  State 
in  1792,  said  of  treaties  exchanging  the  rights  of  the  most-favor- 
ed-nation that  "they  leave  each  party  free  to  make  what  in- 


134  SELECTED  ARTICLES 

ternal  regulations  they  please,  and  to  give  what  preference  they 
find  expedient  to  native  merchants,  vessels,  and  productions." 
In  1817,  Mr.  John  Quincy  Adams,  acting  in  the  same  official  ca- 
pacity, took  the  ground  that  the  "most-favored-nation  clause 
only  covered  gratuitous  favors  and  did  not  touch  concessions  for 
equivalents  expressed  or  implied."  Mr.  Clay,  Mr.  Livingston,  Mr. 
Evarts,  and  Mr.  Bayard,  when  at  the  head  of  the  Department  of 
State,  have  each  given  official  expression  to  the  same  view.  It 
has  also  received  the  sanction  of  the  Supreme  Court  in  more  than 
one  well-considered  decision. 

In  1898,  during  the  reciprocity  negotiations  between  the 
United  States  and  the  Argentine  -Republic,  under  the  pro- 
visions of  section  4  of  the  United  States  tariff  act  of  July 
31,  1897,  Mr.  Buchanan,  the  American  minister  at  Buenos 
Ayres,  reported  to  Secretary  of  State  Sherman  that  the 
Argentine  government  was  apparently  deterred  from  enter- 
ing into  a  treaty  of  reciprocity  with  the  United  States  be- 
cause it  assumed  that  it  would  be  compelled  to  extend  any 
tariff  concessions  which  it  might  make  in  such  a  treaty  with 
the  United  States  to  European  countries  with  which  the 
Argentine  Republic  had  commercial  treaties  provided  for 
most-favored-nation  treatment. 

In  reply  to  this  dispatch  Secretary  of  State  Sherman  in- 
structed Minister  Buchanan,  under  date  of  January  IT,  1898 
(Ms.  Inst.  Arg.  Rep.,  XVII,  306,  as  follows  in  regard  to  the 
United  States'  construction  of  the  most-favored-nation  clause : 

It  is  clearly  evident  that  the  object  sought  in  all  the  varying 
forms  of  expression  is  equality  of  international  treatment,  pro- 
tection against  the  wilful  preference  of  the  commercial  interests 
of  one  nation  over  another,  but  the  allowance  of  the  same  privi- 
leges and  same  sacrifice  of  revenue  duties  to  a  nation  which 
makes  no  compensation  that  has  been  conceded  to  another  na- 
tion for  an  adequate  compensation,  instead  of  maintaining,  de- 
stroys that  equality  of  market  privileges  which  the  most-favored- 
nation  clause  was  intended  to  secure.  It  conceded  for  nothing 
to  one  friendly  nation  what  the  other  gets  only  for  a  price. 
It  would  thus  'become  the  source  of  international  inequality  and 
provoke  international  hostility.  The  neighborhood  of  nations, 
their  border  interests,  their  differences  of  climate,  soil,  and  pro- 
duction, their  respective  capacity  for  manufacture,  their  widely 
different  demands  for  consumption,  the  magnitude  of  the  recipro- 
cal markets,  are  as  many  conditions  which  require  special  treat- 
ment. No  general  tariff  can  satisfy  such  demands.  It  would 
require  a  certainty  of  language  which  excludes  the  possibility 
of  doubt  to  justify  the  opinion  that  the  government  of  any  com- 
mercial nation  had  annulled  its  natural  right  to  meet  these 
special  conditions  by  compensatory  concessions,  or  held  the  right 
only  on  condition  of  extending  the  same  to  a  nation  which  had 
no  compensation  to  offer.  The  fact  that  such  concessions  if 
made  would  inevitably  inure  to  the  equal  benefit  of  a  third  com- 
petitor would  often  destroy  the  motive  for,  as  well  as  the  value 
of,  such  reciprocal  concessions. 


RECIPROCITY  135 

But  instead  of  such  certainty  of  expression,  one  of  the  arti- 
cles in  each  of  the  treaties  referred  tp  contains  a  distinct  recog- 
nition that  special  and  compensatory  commercial  arrangements 
may  be  made,  notwithstanding  the  most-favored-nation  clause; 
and  provided  that  in  such  cases  the  favors  granted  shall  be 
enjoyed  by  the  party  claiming  favored-nation  treatment,  gratui- 
tously if  so  granted,  or  for  equivalent  compensation  if  granted 
for  a  price. 

What  will  be  an  equivalent  compensation  is  to  be  honorably 
determined  by  the  governments  concerned.  So  many  considera- 
tions have  necessarily  entered  into  such  special  concessionary 
agreements  that  no  universal  rule  can  be  applied.  The  price 
has  often  been  special  privileges  in  the  market  of  the  other  for 
certain  manufactures  or  products  of  the  contracting  country; 
but  it  may  also  be  a  port,  a  bay,  or  an  island,  or  a  protectorate, 
as  \\ell  as  an  expanded  market,  or  a  privileged  export  trade.  It 
may  be  anything  within  the  range  of  the  treaty-making  power. 

It  is  not  to  be  supposed  that  a  right  of  such  importance  in 
many  national  emergencies  has  been  abandoned  by  the  Argen- 
tine Republic,  or  that  it  is  only  held  on  condition  of  the  repeated 
and  gratuitous  payment  to  other  countries  of  the  same  con- 
sideration stipulated  in  reciprocity.  The  'right  of  the  other  na- 
tions to  enjoy  the  same  special  concessions  depends  on  their 
ability  to  offer  an  equivalent  compensation.  When  they  do  this, 
tlir  favored-nation  clause  is  rightfully  invoked. 

Hitherto  the  United  States  has  stoutly  maintained  its 
claim  that  we  cannot  properly  be  called  upon  to  make 
common  even  to  those  nations  with  which  we  have  a  most- 
favored-nation  clause  the  advantages  accorded  to  any  one 
unless  others  which  desire  the  same  advantages  are  will- 
ing to  extend  equivalent  concessions.  We  have,  however, 
consistently  taken  the  view  that  where  other  nations  were 
thus  willing  to  grant  equivalent  concessions  they  might  re- 
ceive the  same  reductions  we  had  accorded  to  any  one  of 
their  competitors.  This  was  a  position  which,  though  out 
of  harmony  with  the  European  interpretation  of  the  most- 
favored-nation  clause,  lias  until  recently  been  at  least  ten- 
able. 

Whatever  may  be  thought  of  this  position  regarding  the 
most-favored-nation  clause  in  commercial  treaties  there  was 
at  least  a  basis  for  considering  it  a  self-respecting  and 
self-consistent  position  on  the  tariff  question.  But  the 
Payne-Aldrich  act  introduced  a  new  element  of  difficulty 
by  including  the  so-called  maximum  and  minimum  provi- 
sion. This  was  found  in  sec.  2  and  was  as  follows: 

That  from  and  after  the  thirty-first  day  of  March,  nineteen 
hundred  and  ten,  except  as  otherwise  specially  provided  for  in 
this  section,  there  shall  be  levied,  collected,  and  paid  on  all 
articles  when  imported  from  any  foreign  country  into  the  United 


136  SELECTED  ARTICLES 

States  or  into  any  of  its  possessions  (except  the  Philippine  Is- 
lands and  the  Islands  of  Guam  and  Tutuila),  the  rates  of  duty 
prescribed  by  the  schedule  and  paragraphs  of  the  dutiable  list  of 
section  one  of  this  Act,  and  in  addition  thereto  twenty-five  per 
centum  ad  valorem;  which  rates  shall  constitute  the  maximum 
tariff  of  the  United  States. 

Provided,  That  whenever,  after  the  thirty-first  day  of  March, 
nineteen  hundred  and  ten,  and  so  long  thereafter  as  the  Presi- 
dent shall  be  satisfied,  in  view  of  the  character  of  the  con- 
cessions granted  by  the  minimum  tariff  of  the  United  States,  that 
the  government  of  any  foreign  country  imposes  no  terms  or 
restrictions,  either  in  the  way  of  tariff  rates  or  provisions,  trade, 
or  other  regulations,  charges,  exactions,  or  in  any  other  manner, 
directly  or  indirectly,  upon  the  importation  into  or  sale  in  such 
foreign  country  of  any  agricultural,  manufactured,  or  other  prod- 
uct of  the  United  States,  which  unduly  discriminates  against  the 
United  States  or  the  products  thereof,  and  that  such  foreign 
country  pays  no  export  bounty  or  imposes  no  export  duty  or 
prohibition  which  unduly  discriminates  against  the  United  States 
or  the  products  thereof,  and  that  such  foreign  country  accords 
to  the  agricultural,  manufactured,  or  other  products  of  the  United 
States  treatment  which  is  reciprocal  and  equivalent,  thereupon 
and  thereafter,  upon  proclamation  to  this  effect  by  the  President 
of  the  United  States,  all  articles  when  imported  into  the  United 
States,  or  any  of  its  possessions  (except  the  Philippine  Islands 
and  the  islands  of  Guam  and  Tutuila),  from  such  foreign  coun- 
try shall,  except  as  otherwise  herein  provided,  be  admitted  under 
the  terms  of  the  minimum  tariff  of  the  United  States  as  pre- 
scribed by  section  one  of  this  Act. 

By  virtue  of  this  provision  we  promptly  represented  to 
all  foreign  countries  that  unless  they  could  consent  to  give 
us  their  lowest  tariff  rates  we  should  be  obliged  to  impose 
upon  them  the  maximum  duties  threatened  in  the  law. 
With  most  countries  little  or  no  difficulty  was  experienced. 
But  in  the  case  of  Germany,  France,  and  Canada  the  situa- 
tion was  quite  different.  Although  for  some  time  an  of- 
ficial statement  of  the  results  of  these  negotiations  was 
withheld,  it  is  now  published  as  H.  R.,  sec.  956,  6ist  Cong. 
2d  sess. 

The  German  government  withheld  from  numerous  class- 
es of  imports  from  the  United  States  the  benefit  of  its  con- 
ventional or  minimum  tariff  rates.  These  conventional 
rates  represented  reductions  of  duty  made  by  Germany  as 
concessions  to  various  governments  of  Europe  in  return 
for  equivalent  concessions  made  by  them  in  reciprocity 
treaties,  the  mutual  benefits  of  which  were  given  wide  ap- 
plication through  the  operation  of  the  most-favored-nation 
clause  as  construed  by  European  governments.  The  De- 
partment of  State  had  found  it  impossible,  previous  to  the 


RECIPROCITY  137 

passage  of  the  Act  of  August  5,  1909,  to  obtain  for  Ameri- 
can commerce  complete  equality  of  tariff  treatment  in  Ger- 
many. The  negotiations  resulted  in  action  by  Germany 
granting  to  the  United  States  her  full  conventional  tariff 
rates  in  return  for  the  minimum  tariff  of  the  United  States, 
this  being  an  exchange  of  minimum  for  minimum.  The 
United  States  was  thus  placed  on  exactly  the  same  terms 
as  all  other  countries  to  which  Germany  had  granted  her 
conventional  tariff  in  pursuance  of  treaty  stipulations. 

The  tariff  conditions  affecting  American  commerce  in 
France,  particularly  as  regards  finished  products  of  manu- 
facture, had  b'een  unfavorable.  Under  the  commercial 
agreements  of  1898  and  1908  providing  for  limited  reci- 
procity, the  benefit  of  the  minimum  rates  on  25  numbers 
of  the  French  tariff  had  been  granted  to  the  United  States. 
All  leading  commercial  nations  competing  with  the  United 
States  in  the  markets  of  France  had  the  benefit  of  the  com- 
plete French  minimum  tariff.  During  the  interval  between 
November  i,  1909,  and  March  31,  1910,  the  French  govern- 
uicnt  applied  its  complete  maximum  tariff  rates  to  all  duti- 
able importations  from  the  United  States. 

By  the  settlement  with  France,  under  which  the  mini- 
mum tariff  of  the  United  States  was  granted  to  that  coun- 
try, France  granted  the  minimum  tariff  rates  to  the  United 
States  on  about  80  numbers  of  the  tariff  where  two  rates 
existed.  These  cover  manufactured  articles,  including  ag- 
ricultural and  various  other  forms  of  implements,  tools,  and 
machinery.  In  addition,  assurances  were  given  as  to  the 
maintenance  of  many  general  tariff  rates  in  the  French 
schedule,  the  understanding  being  that  if  certain  rates  are 
lowered  the  United  States  shall  be  accorded  such  reduc- 
tion. 

The  question  requiring  adjustment  with  Canada  grew 
out  of  the  Franco-Canadian  treaty  which  was  put  in  force 
between  the  two  countries  February  i,  1910.  The  Cana- 
dian tariff  consists  of  three  schedules — general,  intermediate, 
and  British  preferential.  The  British  preferential  rates  are 
extended  only  to  the  United  Kingdom  and  to  various  Bri- 


138  SELECTED  ARTICLES 

tish  colonies.  The  intermediate  rates  are  the  minimum 
rates  to  all  other  countries.  Under  the  terms  of  the  Franco- 
Canadian  treaty  France  was  given  a  series  of  intermediate 
rates  and  in  addition  a  small  list  of  special  rates  applying 
to  peculiarly  French  products.  By  the  operation  of  the 
favored-nation  treatment,  the  treaty  rates  were  extended 
automatically  to  several  countries  besides  France,  some  of 
whose  products  competed  with  the  products  of  the  United 
States  in  the  Canadian  market.  This  question  was  adjusted 
after  a  bitter  struggle  by  the  extension  on  the  part  of  Can- 
ada of  rates  below  the  intermediate  rates  of  the  Canadian 
tariff  to  a  very  few  exports  of  the  United  States. 

A  final  word  may  be  desirable  by  way  of  stating  the 
present  position  of  the  United  States  under  the  most- 
favored-nation  clause  and  the  Payne-Aldrich  Act.  We  have 
in  *  force  today  treaties  including  the  most-favored-nation 
clause  with  the  following  nations: 

1.  With      the     equivalence     clause. — Argentine      Republic, 
Austria-Hungary,    Belgium,    Bolivia,    Colombia    (New    Gran- 
ada), Costa  Rica,  Denmark,  Hanseatic  Republic,  Haiti,  Hou- 
duras,   Italy,   Japan,   Liberia,    Mecklenburg-Schwerin,   Olden- 
burg, Paraguay,  Prussia,  Russia,  Sweden  and  Norway,  Ton- 
ga, Tripoli. 

2.  Without  the  equivalence  clause. — China,  Ethiopia   (Abys- 
sinia), Great  Britain,  Greece,  Ottoman  Empire,  Persia,  Servia. 

3.  Unilateral  clause. — Egypt,   Morocco,   Siam. 

With  foreign  countries 'we  thus  have  arrangements  guar- 
anteeing us  the  lowest  rates  granted  any  other  country  at 
present  except  as  already  indicated:  (i)  with  France;  (2) 
with  Canada;  (3)  with  Germany.  To  these  should  be  added 
the  familiar  tariff  concession  of  20  per  cent  made  to  Cuba 
and  the  arrangement  for  limited  free  trade  with  the  Philip- 
pines, as  well  as  an  agreement  with  Brazil,  whereby  we 
receive  a  few  special  concessions. 

If  now  a  reciprocity  arrangement  with  Canada  shall  be 
excepted,  how  will  it  affect  this  existing  status? 

It  is  evident  that  such  an  agreement  will  be  tantamount 
to  the  establishment  of  a  new  see  of  minimum  duties  if  the 


RECIPROCITY  139 

theory  at  bottom  of  our  maximum  and  minimum  provisions 
shall  be  held  to  continue  in  force.  Under  these  circum- 
stances what  will  be  the  necessary  attitude  of  foreign  coun- 
tries? 

1.  They  may  demand  that  they  be  granted  the  benefits 
of  the  lower  Canadian  rates  without  any  concessions  in  re- 
turn.    In  so  doing  they  would  be  demanding  nothing  more 
than  we  ourselves  called  for  in  our  negotiations  under  the 
maximum  and  minimum  provision.     But  in  granting  such  a 
demand   we    should   be   violating   the   recognized    and   tradi- 
tional  reciprocity  policy   of  the  United   States   and  the   pe- 
culiar   interpretation    of   the    most-favored-nation    clause    by 
which  ft  has  been  accompanied. 

2.  Or    they    may    assent    to    the    interpretation    of    reci- 
procity and  the  most-favored-nation  clause  which  is  implied 
in   the   instructions    of   Secretary   Sherman    to    Minister    Bu- 
chanan in   1898  where  he  said,  with  reference  to  the  claims 
of  other  governments  to  certain  rights  which  we  contemplat- 
ed extending  to  the  Argentine  Republic,  that: 

The  right  of  the  other  nations  to  enjoy  the  same  special 
concessions  depends  on  their  ability  to  offer  an  equivalent  com- 
pensation. When  they  do  this,  the  favored-nation  clause  is 
rightfully  invoked. 

And  again: 

What  will  be  an  equivalent  compensation  is  to  be  honorably 
determined  by  the  governments  concerned. 

But,  should  they  adopt  this  point  of  view,  they  would 
indubitably  retain  the  right  to  insist  upon  obtaining  privi- 
leges equivalent  to  those  granted  Canada  conditional  upon 
offering  similar  privileges  in  exchange.  For  as  Mr.  Sher- 
man says: 

When  they  do  this  (offer  an  equivalent  compensation)  the 
favored-nation  clause  is  rightfully  invoked. 

And  as  Secretary  Hay  said  to  Ambassador  White  in 
1899  with  reference  to  a  claim  of  Germany  to  be  treated  in 
the  same  way  as  Switzerland  by  virtue  of  the  most-favored- 
nation  clause: 

Nothing  has  been  conceded  to  Switzerland  which  under  like 
conditions  would  not  have  been  given  to  Germany. 

That  the  United  States  could,  without  a  struggle,  sur- 
render its  traditional  interpretation  of  the  most-favored- 


140  SELECTED  ARTICLES 

nation  clause  is  hardly  to  be  expected.  The  question  would, 
therefore,  remain  whether  the  United  States  could  refuse  to 
open  negotiations  for  the  extension  of  reciprocity  arrange- 
ments to  other  countries  which  might  demand  such  ar- 
rangements. Should  it  so  refuse,  it  must  expect  to  see  the 
present  minimum-rate  basis  granted  by  foreign  countries 
withdrawn.  In  fact,  it  may  be  expected  that  almost  im- 
mediately upon  the  completion  of  the  Canadian  agreement 
Germany  will  withdraw  from  us  certain  of  the  minimum 
rates  now  enjoyed  by  the  United  States.  Germany,  it  is 
well  understood  has  already  made  inquiries  regarding  the 
probable  answer  of  the  United  States  to  a  request  for  the 
extension  of  the  lower  rates  of  the  Canadian  agreement  to 
her  and  is  apparently  prepared  to  carry  her  point  to  the 
logical  extreme.  The  question  of  England's  position  has 
already  been  raised:  in  Parliament  and  will  also  be  pushed 
as  opportunity  favors.  Such  demands  could  not  be  refused, 
nor  could  we  expect  to  secure  much  attention  for  the 
former  threat  that  we  shall  apply  our  maximum  tariff  rates 
to  countries  which  grant  a  special  preference  to  others. 

It  is  thus  apparent  that  one  of  the  most  important 
aspects  of  the  Canadian  agreement  is  found  in  the  fact  that 
it  is  an  important  step  toward  free  trade.  The  old  reci- 
procity treaty  with  Canada  did  not  operate  in  that  direc- 
tion for  several  reasons:  it  was  terminated  too  early,  before 
our  commercial  policy  or  that  of  European  nations  under 
the  high  tariff  system  had  beert  well  developed;  it  fell  at  a 
troubled  time  in  national  and  world  history  when  but  little 
attention  could  be  given  to  matters  of  trade  and  commerce; 
it  affected  a  country  which  was  then  distinctly  a  dependency 
of  England  in  the  narrowest  sense  of  the  term;  it  antedated 
by  many  years  the  keen  struggle  for  markets  which  is  now 
in  progress.  But  today  the  situation  is  quite  different.  We 
may  expect  that  every  step  in  our  commercial  policy  will  be 
closely  watched  by  our  rivals  and  colleagues  in  international 
trade.  If  it  is  true,  as  I  have  suggested,  that  reciprocity 
with  Canada  must  be  considered  in  the  historical  light  and 
that  what  we  shall  do  must  be  guided  by  our  course  in  the 


RECIPROCITY  141 

r 

past,  we  cannot  escape  the  belief  that  this  treaty  will  con- 
stitute a  first  and  most  important  step  away  from  the  un- 
satisfactory conditions  created  under  the  Payne-Aldrich 
Act.  It  will  necessitate  our  entering  into  similar  agree- 
ments with  all  countries  with  which  we  expect  to  enjoy 
friendly  trade  relations.  Refusal  to  grant  concessions  in 
exchange  for  similar  concessions,  as  we  had  done  with  Can- 
ada, could  only  result  in  friction  and  international  irritation 
of  the  pronounced  kind  and  must  necessarily  subject  this 
country  to  severe  retaliation. 

The    most    important    aspect    of    the    present    agreement, 
therefore,   is   its   general   international   aspect.     It   opens   the 
way   to  an   improvement  of   the  present  unsatisfactory  con- 
ditions in  trade,  suggests  a  development  toward  less  exclu- 
ness   in   the    future,   and   affords   a   possibility   of   hopeful 

•tinii  of  many  trying  questions.   . 

The  Senate,  having  acted  on  this  matter,  must  needs  be 
constrained  by  the  trade  policy  of  other  countries  to  act  in 
others  in  the  future.  If  the  Canadian  treaty  be  adopted,  it 
may  prove  the  first  step  in  a  broad  tariff  policy.  It  is  the 
nrst  step  that  costs  most,  and  corresponding  credit  is  due 
the  man  who  has  the  courage  to  take  it  in  the  right  direc- 
tion. 

Living  Age.  268:  491-2.  February  25,  1911. 

America,  Canada  and  Great  Britain. 

The  announcement  of  a  reciprocal  agreement  between 
Canada  and  the  Unite-1  States  for  the  reduction  of  tariff 
duties  is  an  event  of  considerable  moment  in  the  history 
of  the  relations  of  the  three  great  English-speaking  nations 
of  the  world.  The  importance,  indeed,  lies  both  in  the  im- 
mediate substance  of  the  proposals  and  the  new  policy  which 
they  initiate.  Even  sanguine  advocates  of  reciprocity  hardly 
hoped  that  the  agreement  would  .cover  so  many  forms  of 
food  and  raw  materials,  including  such  important  articles 

•rain,  lumber,  and  dairy  and  farm  products,  and  that  the 
l"U<l-\oice<l  discontent  of  Canadian  farmers  would  be  as- 


142  SELECTED  ARTICLES 

suaged  by  a  substantial  reduction  in  the  tariff  upon  agricul- 
tural implements.  The  actual  proposal  fulfills  these  expecta- 
tions. Not  only  farm  products  and  machinery,  but  many 
manufactures  are  included.  There  are  extensive  free  lists. 
The  British  preferential  rates  are  to  be  equalized  with  the 
new  duties. 

This  measure  goes  a  long  way  to  satisfy  the  growing- 
economic  needs  of  the  two  peoples.  For  the  absurdity,  the 
waste,  the  inhumanity  of  these  hardset  barriers,  forbidding 
neighbors  of  the  same  blood  and  language  from  supplying 
to  one  another  the  food  and  fuel  which  one  possesses  in 
abundance  and  of  which  the  other  is  in  need,  have  been  be- 
coming more  apparent  during  recent  years.  At  many  points 
along  the  northern  frontier  of  the  Republic  have  arisen 
great  manufacturing  centres,  thickly  populated  and  requiring 
huge  circuits  of  country  to  furnish  their  daily  food,  their 
lumber,  iron,  and  other  raw  materials,  together  with  the 
power  to  run  their  factories  and  workshops.  Beyond  the 
same  frontier  vast  tracts  of  agricultural  and  stock-raising 
land  have  been  occupied  by  incoming  streams  of  settlers, 
able  and  willing  to  work  the  fields,  forests,  and  mines, 
which  are  needed  to  supply  these  American  demands,  while 
at  the  same  time  they  are  eager  to  take  payment  in  terms 
of  those  very  manufactures  which  their  labors  cheapen  and 
facilitate.  Nowhere  are  the  advantages  of  free  exchange 
greater  and  more  obvious.  No  wonder  the  western  farm- 
ers of  Canada  are  almost  to  a  man  enthusiastic  free  traders, 
and  that,  starting  first  from  the  developed,  manufactures  of 
New  England,  the  demand  for  reciprocity  with  Canada  has 
spread  all  through  the  frontier  states  of  the  Middle  and  Far 
West,  breaking  up  the  solidarity  of  the  great  Republican 
party,  with  its  high  protective  policy. 

The  retention  of  this  obvious  barrier  to  free  exchange  is 
a  striking  instance  of  the  power  which  political  sentiment 
can  exercise  to  damage  the  true  interests  of  two  nations. 
During  the  whole  generation  succeeding  the  Civil  war,  the 
substantial  relations  of  the  two  countries  continued  to  ren- 
der amicable  arrangements  well-nigh  impossible.  The  in- 


RECIPROCITY  143 

equality  in  wealth,  population,  and  status  was  too  great  and 
obvious,  and  made  itself  felt  in  every  approach.  The  Unit- 
ed States  flaunted  her  superior  strength  and  size.  Canada 
did  not  possess  the  well-founded  self-conndence  needed  to 
meet  contempt  with  equanimity.  Now  that  Canada  in  ad- 
vancing swiftly  in  population  and  in  wealth,  and  has  won 
the  dignity  and  self-reliance  of  her  status  as  a  great  new- 
world  power,  she  is  able  to  take  a  calmer  consideration  of 
her  true  interests.  Meanwhile,  the  actual  pressure  of  eco- 
nomic needs  in  the  United  States,  with  her  ninety  millions 
of  people,  compels  her  government  to  favor  some  loosening 
of  barriers.  If  the  proposed  legislation  goes  through  Con- 
gress, it  must  be  estimated,  not  only  on  its  immediate  value, 
which  is  large,  but  as  a  precedent  for  further  steps  of  in- 
dustrial co-operation  between  the  two  nations,  which  may 
take  place  at  an  accelerated  pace  when  this  utility  is  attested 
by  experience.  " 

There  are,  we  know,  Imperialists  disposed  to  view  with 
alarm  this  tariff  arrangement  with  America  as  inimical  to 
the  solidarity  of  the  Empire.  That  Canadians  themselves  do 
not  so  regard  it  is  evidenced  by  the  fact  that  the  great 
larmer's  demonstration,  held  recently  at  Ottawa,  urged  on 
the  go\  eminent,  as  a  simultaneous  policy,  reciprocity  with 
the  United  States  and  free  trade  with  the  Mother  Country. 
1'ull  free  trade  in  our  English  sense  can  hardly  be  said  to 
lie  within  the  range  of  practical  politics  for  Canada.  But  it 
igniticant  that,  in  both  great  nations  of  North  America, 
a  vigorous  movement  towards  "tariff  for  revenue  only"  is 
afoot,  and  may,  within  the  next  few  years,  dominate  both 
governments.^  Such  an  approach  to  sound  principles  of  for- 
eign commerce  on  the  part  of  both  America  and  Canada  is 
far  more  advantageous  to  this  country,  both  commercially 
and  politically,  than  any  possible  extension  of  the  policy  of 
Imperial  Preference.  We  entertain  no  dislike  of  colonial 
preferences.  Why  should  we?  They  are  admirable,  alike 
as  a  natural  expression  of  good-will  toward  the  Mother 
Country,  and  as  a  relaxation  of  a  protective  tariff.  But 
there  is  no  permanency  in  them,  especially  in  the  case  of  a 


144  SELECTED  ARTICLES 

nation  with  manufacturing  ambitions  like  Canada.  This 
was  clearly  proved  by  the  partial  withdrawal  of  the  prefer- 
ence on  woolen  goods  as  soon  as  the  products  of  Yorkshire 
mills  began  to  make  their  merits  too  evident  in  Canadian 
markets. 

Our  satisfaction  at  the  approaching  commercial  arrange- 
ment between  Canada  and  this  United  States  is,  however, 
by  no  means  confined  to  our  conviction  that  the  interests 
both  of  Canada  and  of  the  country  are  served  by  every  ap- 
proach towards  economic  co-operation  of  this  order.  The 
political  implications  of  this  co-operation  are  even  more 
satisfactory,  when  taken  in  conjunction  with  the  liberal  sug- 
gestions for  permanent  and  general  arbitration  between 
Great  Britain  and  the  United  States  recently  put  forward  in 
the  most  friendly  spirit  by  Mr.  Taft  an,d  supported  by  many 
men  of  influence  in  both  countries.  ^  A  general  arbitration 
treaty  of  this  sort,  to  which  this  country,  the  United  States, 
and  Canada  should  be  parties,  would,  in  our  judgment,  form 
the  soundest  possible  foundation  for  that  alliance  of  the 
English-speaking  nations  which  should  perform  in  the  fu- 
ture a  service  of  incomparable  value  in  the  preservation  of 
the  peace  of  the  civilized  world.  ^  Many  thoughtful  students 
of  politics,  watching  the  menacing  clouds  which  show  on  the 
horizon,  are  turning  to  some  such  effective  co-operation  of 
powerful  Anglo-Saxon  peoples  as  the  best  safeguard  of 
civilization.  But  to  those  in  this  country  who  entertain  this 
view,  one  word  of  warning  is  essential.  No  hearty  or  last- 
ing co-operation  with  the  United  States  or  Canada  will  be 
practicable  while  we  refuse  Ireland  Home  Rule  and  while 
our  present  association  with  Japan  continues.  We  may  be 
loth  to  break  away  from  an  experiment  which,  however 
dark  and  hazardous,  appeared  to  carry  in  it  certain  elements 
of  present  utility.  But  it  is  best  to  face  the  facts.  There 
is,  of  course,  nothing  in  our  Japanese  alliance  to  interfere 
with  the  most  liberal  arrangements  for  arbitration  with 
America.  But  such  an  Anglo-American-Canadian  alliance 
as  might  not  unreasonably  emerge  from  the  closer  political 
and  commercial  relations  between  these  countries  is  an  im- 
possibility so  long  as  our  Japanese  engagement  holds. 


RECIPROCITY  145 

Living  Age.  269:  67-76.  April  8,  191 1. 

Canadian-American   Reciprocity  Agreement. 

Sir  Alfred  Mond,  Bart.,  M.  P. 

The  surprise  with  which  the  tariff  reformers  now  seem 
to  be  overwhelmed  at  the  news  of  the  Reciprocity  Agree- 
ment, is  one  more  result  of  their  persistent  misunderstanding 
of  Canadian  fiscal  history,  Canadian  development,  and  the 
spirit  that  inspires  the  Canadian  people.  They  have  from 
the  first  been  led  astray  by  their  besetting  delusion  that  it 
would  be  possible  for  them  in  one  way  or  another  to  "nob- 
ble" Canadian  products  and  trade  for  Great  Britain  to  the 
rx^lusion  of  other  countries.  Mr.  Joseph  Chamberlain,  the 
originator  of  the  idea,  furnished  himself  one  of  the  first  and 
most  striking  examples  of  the  'ludicrous  misapprehension  of 
Canadian  views  in  the  celebrated  schedule  of  prohibited  in- 
dustries proposed  in  his  speech  at  Glasgow  on  October  6, 
1903.  As  the  version  of  that  speech  subsequently  published 
in  book  form  gives  a  revised  and  inaccurate  report  of  what 
Mr.  Chamberlain  said,  it  may  be  well  to  quote  the  exact 
words  used  by  him  on  that  occasion: 

After  all,  there  are  many  things  which  you  do  not  now  make, 
many  things  for  which  we  have  a  great  capacity  of  production. 
Leave  them  to  us  as  you  have  left  them  hitherto.  Do  not  in- 
crease your  tariff  walls  against  us,  pull  them  down  where  they 
are  unnecessary  to  the  success  of  this  policy  to  which  you  are 
committed.  Let  us  in  exchange  with  you  have  your  produc- 
tions in  all  these  numberless  industries  which  have  not  yet  been 
erected. 

This  proposal  by  Mr.  Chamberlain,  who  was  always  dis- 
posed to  regard  the  arrangement  with  the  Colonies  as  a 
bargain,  was  evidently  in  his  mind  at  a  still  earlier  date. 
Speaking  in  London  on  June  9,  1896,  he  referred  to  the  sug- 
gestion that  while  the  Colonies  "should  be  left  absolutely 
free  to  impose  what  protective  duties  they  please  both  upon 
Foreign  countries  and  upon  British  commerce,  they  should 
be  required  to  make  a  small  discrimination  in  favor  of 
British  trade,  in  return  for  which  we  are  expected  to  change 
our  whole  system  and  impose  duties  on  food  and  raw  ma- 
terial." On  this  suggestion  he  made  the  following  out- 
spoken comment: 


146  SELECTED  ARTICLES 

Well,  I  express  again  my  own  opinion  when  I  say  that  there 
is  not  the  slightest  chance  that  in  any  reasonable  time  this 
country,  or  the  Parliament  of  this  country,  would  adopt  so  one- 
sided an  agreement.  The  foreign  trade  of  this  country  is  so 
Jarge,  and  the  foreign  trade  of  the  Colonies  is  comparatively 
so  small,  that  a  small  preference  given  to  us  upon  that  foreign 
trade  by  the  Colonies  would  make  so  trifling  a  difference — would 
be  so  small  a  benefit  to  the  total  volume  of  our  trade — that  I 
do  not  believe  the  working  classes  of  this  country  would  con- 
sent to  make  a  revolutionary  change  for  what  they  would  think 
to  be  an  infinitesimal  gain. 

While  on  the  subject  of  Mr.  Chamberlain's  love  for  a 
bargain,  it  may  be  well  to  point  out  that  that  statesman 
threw  away,  without  any  return,  one  of  the  best  objects  of 
barter  in  an  arrangement  with  the  Colonies  which  any 
British  statesman  could  desire.  He  bestowed  upon  the 
Dominion,  without  any  equivalent  to  this  country,  the 
enormous  advantage  granted  to  it  by  the  amendment  of  the 
Trustees  act,  putting  Canadian  government  and  municipal 
securities  on  the  same  basis  as  our  own,  and  thereby  ena- 
bling the  smallest  Canadian  municipality  to  raise  money  on 
better  terms  than  certain  great  powers,  such  as  Germany, 
Russia  and  Japan,  by  giving  them  access  to  the  cheapest 
money  market  in  the  world.  That,  in  reality,  was  a  prefer- 
ence given  gratis  to  Canada  at  the  cost  of  diminishing  the 
value  of  British  "gilt-edged"  securities,  and  it  was  of  far 
greater  importance  to  the  Canadians  than  the  proposed  two- 
shilling  duty  on  wheat  could  ever  possibly  be.  If  at  any 
time  we  had  had  a  statesman  of  really  wide  vision  and  fore- 
sight, that  great  advantage  accorded  to  Canada  might  have 
been  utilized  for  securing  a  far  more  favorable  tariff  for  our 
goods  from  the  Canadians  than  they  have  ever  had  under 
the  existing  preference  arrangement,  while  it  would  further- 
more have  been  an  important  step  towards  eventual  free 
trade  between  Great  Britain  and  her  most  important  colony. 

One  of  the  peculiar  difficulties  of  following  the  Neo- 
protectionist  arguments  on  preference,  as  on  their  other 
proposals,  is  the  changes  which  those  arguments  have  under- 
gone from  the  commencement  of  the  tariff  reform  propagan- 
da. 

It  has  suited  the  tariff  reform  propagandists  in  this 
country  constantly  to  represent  the  Canadians  as  clamoring 


RECIPROCITY  147 

for  the  adoption  of  their  preference  scheme,  while  they  fur- 
ther tried  to  secure  its  acceptance  in  this  country  by  vague 
threats  of  impending  disaster  to  Great  Britain  and  the 
Empire,  alternately  of  a  political  and  a  commercial  char- 
acter. As  a  matter  of  fact,  that  clamor  has  existed  only  in 
their  own  imaginations. 

A  reference  to  some  of  the  statements  of  Colonial  Min- 
isters on  this  subject  will  dispose  of  the  idea  that  any  pres- 
sure of  the  kind  referred  to  has  been  brought  upon  the 
Mother  Country.  The  attitude  of  Canada  was  very  clearly 
expressed  by  Sir  Wilfrid  Laurier  in  1897  and  by  Mr.  Field- 
ing, the  Canadian  Minister  of  Finance,  at  the  second  Colo- 
nial Conference  in  1902.  Sir  Wilfrid  Laurier  said: 

If  England  were  giving  to  me  a  preference  over  other  na- 
tions, taking  our  goods  on  exceptionally  favorable  terms,  I  would 
not  object.  ...  It  would  be  a  great  boon.  But  for  how  long 
would  it  last?  Would  it  be  an  advantage  in  the  long  run?  That 
is  what  men  who  think  beyond  the  passing  moment  have  to 
ask  themselves.  Suppose  England  did  such  a  thing  and  aban- 
doned her  free  trade  record,  she  would  inevitably  curtail  the 
purchasing  power  of  her  people.  And  do  you  not  think  we 
should  suffer  from  that — we  who  alone  have  natural  resources 
enough  to  feed  your  millions  from  our  fertile  lands?  I  have 
too  great  a  belief  in  English  common  sense  to  believe  they  will 
do  any  such  thing.  What  we  have  done  in  the  way  of  tariff 
preference  to  England  we  have  done  out  of  gratitude  to  Eng- 
land, and  not  because  we  want  her  to  enter  upon  the  path  of 
protection. 

The  Canadian  attitude  is  still  more  clearly  expressed  in 
the  statement  by  Mr.  Fielding  in  1902: 

We  do  not  profess  that  we  want  to  introduce  British  goods 
to  displace  goods  made  by  the  manufacturers  of  Canada.  That 
is  a  point  upon  which  we  must  speak  with  great  frankness. 
Whether  or  not  it  was  a  wise  policy  for  Canada  to  foster  her 
manufactures  by  high  duties  is  a  point  hardly  worth  discuss- 
ing now;  we  must  deal  with  things  as  we  find  them.  We  had 
very  high  duties  under  the  former  tariff.  The  present  govern- 
ment have  reduced  those  duties  very  materially,  especially  in 
the  case  of  British  goods.  Many  things  of  British  manufacture 
paid  40  per  cent.,  50  per  cent.,  or  60  per  cent.,  but  we  have  re- 
duced these  now  down  to  23  per  cent,  from  Great  Britain,  and 
we  think  that  in  those  cases  we  have  gone  about  as  far  as 
we  can  without  sacrificing  our  own  manufacturers.  The  in- 
terests are  very  large:  the  interests  of  the  capital  invested,  the 
labor  and  the  banking  interest,  and  the  many  other  interests 
which  cluster  round  a  great  industry.  Therefore,  if  we  are 
asked  to  reduce  our  duties  and  bring  in  British  goods  and  dis- 
place Canadian  manufactures,  we  must  frankly  say  that  it  is 
not  possible  for  us  to  do  so.  But  we  say  that  it  is  quite  pos- 
siblo  to  give  an  advantage  to  British  goods  in  some  cases  by 
raising  the  tariff. 

The  most  rudimentary  acquaintance  with  the   history  of 


148  ,       SELECTED  ARTICLES 

this,  discussion  in  Canada,  shows  clearly  that  the  Canadian 
manufacturers  who  have  welcomed  the  advocacy  of  protec- 
tion in  England  as  a  means  of  strengthening  in  the  Domin- 
ion that  protection  from  which  they  themselves  profit,  never 
have  had  any  intention,  so  far  as  it  lay  in  their  power,  to 
allow  British  manufacturers  to  compete  on  anything  like 
equal  terms  with  their  own  products.  The  nature  of  the  gift 
offered  to  Great  Britain  by  these  manufacturers,  the  so- 
called  Imperialists  of  the  Dominion  is  clearly  shown  by 
their  attitude  towards  preference  to  England  during  the  in- 
quiry carried  on  by  the  Tari'ff  Commission  in  different  Ca- 
nadian provinces  in  1906. 

This  attitude  is  aptly  symbolized  by  the  action  of  a  pro- 
tectionist firm  of  cotton  manufacturers  at  Valleyfield,  the  in- 
dustrial Venice  of  Canada,  who,  after  running  up  the  Union 
Jack  over  their  mill,  immediately  proceeded  to  submit  to  the 
Commission  a  demand  for  increased  duties  in  the  cotton  sched- 
ules with  the  object  of  reducing  the  imports  from  Lancashire. 
In  the  evidence  given  by  manufacturers  before  the  Commission, 
the  British  Preference  was  frequently  attacked,  the  witnesses 
speaking  of  London  and  Liverpool  as  "foreign"  and  of  English- 
men who  came  to  Canada  in  search  of  orders  as  "foreigners." 
Yet  many  of  those  "Canadians"  who  thus  proclaimed  their  newly, 
acquired  nationality  hailed  from  the  very  districts  whose  imports 
they  .wished  to  exclude  from  Canada.  Mr.  Porritt,  in  his  Sixty 
Years  of  Protection  in  Canada,  points  out  that  the  Canadian 
quarrymen  who  were  endeavoring  to  exclude  Aberdeen  gran- 
ite, were  themselves  chiefly  Scots  from  Aberdeen.  One  of 
them  confessed  to  Mr.  Porritt  that  he  expected  the  people 
at  home  would  think  they  were  "darned  mean." 

Mr.  Porritt  says,  "It  is  difficult  to  recall  a  single  session 
of  the  Commission  in  industrial  Canada  in  which  the  pref- 
erence (to  Great  Britain)  was  not  attacked  by  the  manu- 
facturers." On  the  other  hand,  the  farmers  constantly  and 
enthusiastically  defended  preference — they,  together  with 
the  importers  of  textiles  in  Montreal  and  Toronto,  being 
urgent  in  their  pleas  for  the  repeal  of  the  Tariff  Act  amend- 
ment of  1904  which  curtailed  it.  "The  farmers  commended 


RECIPROCITY  149 

the  preference  because  it  afforded  some  relief  from  the 
tariff  and  because  it  served  as  a  tie  to  the  Mother  Country. 
They  realized  that  as  a  result  of  'the  good  feeling  towards 
Canada,  Great  Britain  gave  a  sentimental  preference  to 
Canadian  products,  and  that  they  had  already  a  market  in 
England  for  all  their  produce." 

Of  course,  in  the  resolutions  passed  by  Canadian  manu- 
facturers at  public  meetings  and  intended  for  British  read- 
ers, their  real  intention  to  "protect"  themselves  effectively 
from  British  competition  is  not  so  plainly  expressed,  al- 
though it  is  sufficiently  obvious.'  Thus,  for  instance,  in  a 
resolution  of  the  Canadian  Manufacturers'  Association,  the 
"substantial  preference  to  the  Mother  Country"  is  made 
subject  to  the  condition  that  "the  minimum  tariff  must  af- 
ford adequate  protection  to  all  Canadian  producers."  The 
Ottawa  Board  of  Trade  in  November,  1903,  also  insisted 
upon  such  a  form  of  protection  as  would  "reasonably  safe- 
guard such  industries  and  business  interests  as  have  been 
developed  under  the  existing  tariff  conditions." 

A  great  deal  of  the  difficulty  of  British  trade  with  Can- 
ada, as  with  the  Protectionist  Colonies  generally,  consists  in 
the  tariffs  secured  by  the  Colonial  manufacturers  against 
English  goods,  which  in  Canada  in  particular  heavily  bur- 
den the  woollen  and  cotton  industries.  On  the  other  hand, 
the  only  real  hope  of  relief  from  this  burden  lies  in  the  gen- 
c-ral  lowering  of  the  tariff  walls  in  response  to  the  protests 
of  the  consuming  masses.  Those  flag-waving  colonial  pa- 
triots seem  to  think  that  they  have  done  something  very 
generous  when  they  give  this  country  a  preference  over 
her  foreign  competitors,  while  the  duty  to  which  her  goods 
are  still  subject  is  sufficient,  practically  to  exclude  or  greatly 
hamper  them  in  favor  of  the  protected  colonial  article. 

Speaking  in  Parliament  at  Ottawa  on  February  9,  1911, 
Mr.  Fielding,  the  Canadian  Minister  of  Finance,  thus  char- 
acterized this  type  of  Colonial  Imperialist:  "Unable  to  deal 
with  the  question  (of  reciprocity)  on  its  merits,  many  op- 
ponents are  beating  the  big  drum  of  Imperialism  and  there- 
by insulting  the  intelligence  of  the  Canadian  people." 


i5o  SELECTED  ARTICLES 

As  to  the  alleged  damage  done  to  Imperial  interests  by 
the  manner  in  which  the  Liberals  are  said  to  have  held  the 
Colonies  at  arm's  length,  and  rejected  offers  by  the  latter  of 
which  nobody  had  ever  heard,  the  best  answer  is  to  be 
found  in  the  statements  of  responsible  Canadian  Ministers, 
including  Sir  Wilfrid  Laurier,  and  in  the  resolutions  of  the 
farmers  of  Canada,  who  have  been  the  most  consistent  and 
effective  supporters  of  preference  to  England,  and  the  only 
class  directly  interested  in  the  tariff  reformers'  proposal. 
The  Hon.  W.  S.  Fielding,  the  Canadian  Minister  of  Finance, 
telegraphing  on  February  7,  1911,  to  the  High  Commission- 
er for  Canada,  not  only  disposed  of  the  fears  that  the  Reci- 
procity Agreement  might  seriously  affect  imports  from 
Great  Britain  and  that  discrimination  would  be  made  in 
favor  of  the  United  States  and  against  this  country,  but  ex- 
pressly stated  that 

Canada's  right  to  deal  with  the  British  preference  as  she 
pleases  remains  untouched  by  the  agreement.  The  adoption 
of  the  agreement  will  probably  lead  to  some  further  revision 
of  the  Canadian  tariff,  in  which  the  Canadian  Parliament  will 
be  entirely  free  to  fix  the  British  preferential  tariff  at  any  rates 
that  may  be  deemed  proper. 

The  determination  of  the  Canadian  farmers  as  expressed 
in  the  resolutions  laid  by  them  before  Sir  Wilfrid  Laurier 
on  December  16,  1910,  is  equally  clear.  They  state  that 
they 

also  favor  the  principle  of  the  British  preferential  tariff,  and 
urge  an  immediate  lowering  of  the  duties  on  all  British  goods 
to  one  half  the  rates  charged  under  the  general  tariff  schedule, 
whatever  that  may  be;  and  that  any  trade  advantages  given 
the  United  States  in  reciprocal  trade  relations  be  extended  to 
Great  Britain. 

They  likewise  advocate 

such  further  gradual  reduction  of  the  remaining  preferen- 
tial tariff  as  will  ensue  the  establishment  of  complete  free 
trade  between  Canada  and  the  Motherland  within  ten  years; 
and  add 

that  the  farmers  of  this  country  are  willing  to  face  direct  tax- 
ation in  such  form  as  may  be  advisable  to  make  up  the  rev- 
enue required  under  new  tariff  conditions. 

That  the  Canadian  government  is  inspired  by  precisely 
the  same  desire  is  evident  from  the  statement  made  by  Mr. 
Fielding,  the  Finance  Minister,  in  the  Canadian  House  of 
Commons  on  January  26,  1911,  in  the  course  of  which  he 
said: 


RECIPROCITY  151 

Of  course,  as  a  general  principle,  whether  Great  Britain  is 
to  be  interested  or  not,  any  duty  that  may  be  lowered  to  any 
foreign  country,  according  to  our  well-established  policy,  would 
be  at  the  same  time  lowered  to  Great  Britain,  and  a  clause  will 
be  inserted  in  the  resolutions  which  I  shall  have  the  honor  to 
propose  providing  that  where  in  any  case  the  duties  are  lower- 
ed the  benefit  shall  be  extended  to  Great  Britain.  As  a  matter 
of  fact,  they  are  only  lower  on  a  few  items  of  food-stuffs  than 
the  preferential  rate,  and  they  are  articles  which  Great  Britain 
does  not  send  us  at  all.  Notwithstanding,  I  think  that  if  this 
arrangement  be  confirmed,  it  would  probably  lead  to  some  re- 
adjustment of  our  tariff  here  and  there,  in  order  that  we  may 
maintain,  as  we  fully  intend  to  do,  the  principle  of  the  British 
preference,  and  that  the  concessions  under  the  tariff  now  exist- 
ing may  be  maintained  under  the  condition  of  affairs  when  the 
arrangement  is  made.  .  .  .  The  preference  is  a  great  and 
important  question.  We  have  dealt  with  it  in  the  past,  we 
shall  deal  with  it  again.  I  do  not  want  to  import  into  this 
discussion  anything  of  party  color,  but  I  ask  my  hon.  friend  if 
he  does  not  think  that  the  British  preference  may  safely  be 
trusted  in  the  hands  of  the  men  who  created  it? 

If  any  further  proof  were  needed  that  the  "one-sided  bar- 
gain" proposed  by  Mr.  Chamberlain  is  not  necessary  for  the 
maintenance  of  Canadian  loyalty,  it  would  be  found  in  the 
indignant  protests  of  representative  Canadians  against  the 
tariff  reform  thesis  that  their  loyalty  could  only  be  secured 
by  the  payment  of  a  price. 

Aa  a  matter  of  fact,  it  is  evident  to  all  those  who  have 
followed  the  development  of  the  tariff  reform  propaganda 
in  this  country  that  their  proposals  have  always  been  too 
vague  for  any  business  man  to  base  practical  calculations 
upon  them.  That  vagueness  and  inaccuracy  still  continue, 
as  may  be  seen  by  the  statement  of  the  Leader  of  the  Op- 
•  position  in  the  House  of  Commons  on  February  6,  which 
in  its  reference  to  thirty  years  during  which  Canada  vainly 
offered  preference  to  Great  Britain,  and  his  suggestion  that 
reciprocity  with  the  United  States  is  a  new  departure,  fur- 
nishes an  interesting  illustration  of  the  "persistent  sloppi- 
ness"  rightly  attributed  by  Mr.  Asquith  to  the  whole  propa- 
ganda. 

In  Canada  the  movement  in  favor  of  reciprocity  with 
the  United  States  goes  back  to  the  beginning  of  the  nine- 
teenth century.  It  assumed  an  exceptionally  ,vigorous 
character  in  1846  on  the  adoption  of  free  trade  by  this 
country  and  the  concurrent  grant  of  greater  fiscal  freedom 
to  the  British  North  American  provinces,  complaints  be- 


152  SELECTED  ARTICLES 

ing  made  that  Peel  had  not  on  that  occasion  secured  from 
the  United  States  the  free  admission  of  Canadian  products. 
The  reciprocity  which  was  then  demanded  was  eventually 
secured  by  the  Elgin-Marcy  Treaty,  which  remained  in  force 
from  1854  to  1866,  when  it  was  brought  to  a  close  by  the 
United  States.  The  renunciation  of  that  Treaty,  which  had 
greatly  stimulated  the  trade  of  both  countries,  was  deeply 
resented  in  Canada,  yet  so  great  was  the  desire  of  the  Ca- 
nadian people  to  restore  a  similar  agreement  with  the  States 
that  both  Conservative  and  Liberal  Administrations  sent 
Commissioners  to  Washington  to  promote  it  in  1892  and 
1898-99,  numerous  other  attempts  being  made  with  the  same 
object  both  before  and  after  those  dates,  while  for  many 
years  the  offer  of  reciprocity  retained  its  place  upon  the 
Canadian  Statute  Book.  Indeed,  absolute  free  trade  both  in 
manufactures  and  natural  products  was  advocated  in  the 
Liberal  campaign  carried  on  in  1888  by  Sir  Richard  Cart- 
wright,  and  it  was  the  reciprocity  plank,  formally  adopted 
in  1893,  which  won  the  election  for  the  Liberals  in  1896. 
It  was  only  the  persistent  refusal  of  Washington  to  consider 
the  suggestion  and  the  decision  in  1896  to  raise  a  tariff  wall 
against  the  Dominion  that  forced  the  Canadians  into  the 
independent  development  of  their  own  resources  and  the 
search  for  trans-oceanic  markets  east  and  west. 

It  should  hardly  be  necessary  to  recall  that  preference 
was  introduced  by  the  Laurier  Ministry  in  1897  in  redemp- 
tion of  the  free  trade  pledges  made  by  them  in  the  preced- 
ing campaign  in  which  they  defeated  the  Conservatives. 
Those  Canadian  Conservatives  who  now,  in  opposition,  are 
such  strong  advocates  of  preferential  arrangements  with  the 
Mother  Country  gave  no  preference  whatever  to  Great  Bri- 
tain from  1887  to  1896,  during  which  period  they  were  in 
power,  any  more  than  the  British  Conservative  Tariff  Re- 
form party  took  any  practical  steps  during  their  long  term 
of  office  to  grant  to  Canada  the  preference  which  they  ad- 
vocate. Speaking  at  Lethbridge  on  August  31  last,  Sir  Wil- 
frid Laurier  taunted  his  Conservative  opponents  with  their 
opposition  to  reciprocity  on  the  ground  that  it  might  en- 


RECIPROCITY  153 

danger  the  British  preference.  He  recalled  that  it  was  the 
Conservatives  who  had  always  opposed  that  preference,  and 
that  on  its  introduction  in  April,  1897,  Sir  Charles  Tupper, 
the  leader  of  their  party,  declared  it  was  going  to  destroy 
Canadian  manufactures. 

They  repeated  that  for  one  or  two  years,  and  then  they  had 
to  abandon  the  cry  because  the  manufacturers  were  not  destroy - 
ed.  The  tall  chimneys  did  not  topple  over,  but  became  stronger, 
rind  there  were  more  of  them.  They  had  another  cry,  which  was 
that  it  was  not  patriotic  to  give  the  preference  to  the  trade  of 
the  Mother  Country  unless  the  Mother  Country  was  prepared 
to  ui\«>  us  the  preference  in  her  own  markets  also.  .  .  .  Why 
di«l  \ve  «ive  it?  First  of  all,  because  it  suited  us  to  do  so. 

1 1  ere  it  may  be  recalled  that  at  an  earlier  date,  between 
1X7*)  and  1887,  strong  protests  were  made  from  time  to  time 
in  thi>  country  against  the  protective  policy  of  Canada 
again>t  Kngland — among  the  most  noteworthy  being  that 
by  John  I '» right  at  Birmingham  in  1885  and  those  in  both 
Mouses  of  Parliament  in  1887. 

The  subject  of  a  probable  reciprocity  arrangement  was, 
of  course,  keenly  discussed  in  the  Dominion  as  well  as  in 
the  I'nitcd  States  last  autumn.  It  was  both  advocated  and 
opposed  oil  many  different  grounds.  In  Canada,  some  of  the 
most  weighty  opinions  I  heard  expressed,  while  approving 
of  it  in  principle,  merely  expressed  doubt  as  to  the  possibil- 
ity of  ever  arriving  at  anything  like  a  fair  bargain  with  the 
American  negotiators.  In  fact,  it  was  more  a  question  of 
term-  than  of  principle  that  gave  rise  to  doubts  on  the  part 
of  -onie  Canadians  as  to  the  wisdom  of  entering  into  any 
negotiations  at  all.  This  is  not  surprising  in  view  of  the 
repeated  rebuffs  which  proposals  for  reciprocity  on  the  part 
of  the  Canadians  had  formerly  met  with  at  Washington. 

As  usual  in  protectionist  countries,  all  those  sections  in 
both  countries  who  benefit  by  the  tariffs  at  the  expense  of 
the  rest  of  the  community  are  very  local.  The  depressing 
experience  of  the  Canadians  in  the  past  thus  led  to  a  kind 
of  blindly  fatalistic  conviction  that  it  would  be  impossible 
ever  to  find  a  body  of  public  opinion  strong  enough  to 
overcome  the  resistance  of  the  interested  advocates  of  the 
status  quo.  Even  the  Canadian  friends  of  reciprocity  were 
very  doubtful  whether  the  negotiations  would  lead  to  any 


154  SELECTED  ARTICLES 

practical  results.  But  this  time  the  hands  of  Sir  Wilfrid 
Laurier  were  undoubtedly  much  strengthened  by  the  revela- 
tion of  the  force  of  free  trade  feeling  in  the  growing  West 
of  Canada,  a  force  which  he  had  himself  had  an  opportunity 
of  gauging  during  his  tour  through  those  provinces  last 
year,  and  which  found  a  visible  and  impressive  symbol  in 
the  large  and  important  deputation  of  farmers  that  came 
to  Ottawa  on  December  16  to  lay  their  views  before  the 
government. 

On  the  other  hand,  the  swing  of  the  pendulum  in  a 
democratic  direction  at  last  year's  election  in  the  United 
States — a  swing  due  in  the  main  to  a  passionate  -revolt 
of  the  American  people  against  the  Payne-Aldrich  tariff,  a 
revolt  so  universal  that  it  took  by  surprise  even  the  clever- 
est electioneers  and  had  to  be  witnessed  on  the  spot  to  be 
thoroughly  realized — forced  the  hands  of  the  Republican 
Executive.  It  made  obvious  to  the  Republican  leaders  that 
they  must  swim  with  the  tide  or  be  prepared  to  see  their 
party  submerged  at  the  Presidential  Election  in  1912.  The 
significant  fact  that  not  only  President  Taft  but  Colonel 
Roosevelt  supports  the  ratification  of  the  Reciprocity  Agree- 
ment, and  that  some  of  the  oldest  "standpat"  hightariffers 
among  the  Republican  chiefs  have  taken  the  same  course,  is 
the  best  indication  of  what  popular  feeling  in  the  United 
States  is  believed  to  be  by  those  who  have  made  it  the  busi- 
ness of  their  lives  to  keep  their  finger  on  the  public  pulse. 

This  combination  makes  it  practically  certain  that  the 
Reciprocity  Agreement  will  be  ratified  in  both  countries  and 
that  little  heed  will  be  paid  to  those  representatives  of 
sectional  interests  who  were  formerly  all-powerful  at  Ot- 
tawa and  Washington.  It  is  not  to  be  expected  that  when 
once  this  breach  has  been  made  in  the  tariff  wall  it  will 
ever  be  rebuilt,  or  even  that  the  barrier  will  be  allowed  to 
remain  intact  in  other  directions.  Already  the  farmers'  or- 
ganizations in  America  are  beginning  to  demand  reductions 
in  the  tariff  on  manufactured  articles  as  compensation  for 
the  fact  that  they  are  themselves  to  be  exposed  to  the  free 
competition  of  their  Canadian  rivals  in  their  own  business. 


RECIPROCITY  155 

Let  us  consider  for  a  moment  the  character  of  the  Reci- 
procity Agreement  which  the  United  States  has  now  been 
driven  to  accept  by  the  combined  effect  of  the  popular  re- 
volt against  high  prices  and  the  growing  needs  of  her  own 
manufacturers  for  fresh  supplies  of  cheap  raw  material. 
The  new  arrangement,  which  does  not  take  the  formal 
shape  of  a  treaty,  but  is  to  come  into  effect  by  concurrent 
legislation  at  Ottawa  and  Washington,  comprises  a  compara- 
tively large  schedule  concerned  chiefly  with  food  products 
of  all  kinds  that  are  made  reciprocally  free  in  both  countries. 
This  free  list  comprises: 

Live  animals  and  poultry,  corn  and  fodder,  fresh  vege- 
tables and  fruits,  dairy  produce,  oils,  seeds,  fish,  salt,  mineral 
waters,  half-finished  timber  in  various  forms,  plaster  rock, 
mica,  feldspar,  asbestos,  etc.,  glycerine,  talc,  sulphate  of 
soda,  carbon  electrodes,  rolled  iron  or  steel  sheets,  and 
plates,  steel  wire,  galvanized  iron,  etc.,  type-casting  and 
type-setting  machines,  barbed  fencing  wire,  etc.,  coke,  wood- 
pulp  and  paper. 

The  second  schedule  establishes  identical  rates  of  duty 
for  a  considerable  number  of  semi-manufactured  food  prod- 
ucts; fresh  meats,  bacon  and  ham,  wheat  and  other  flours, 
oatmeal,  barley  malt,  pearl  barley,  etc.;  macaroni,  biscuits, 
candied  peel,  fruits  and  confectionery  of  all  kinds,  pickles 
and  syrups,  mineral  waters  in  bottles,  essential  oils,  etc.;  a 
long  list  of  agricultural  implements,  stone,  roofing-slate,  as- 
bestos, printing  ink,  cutlery,  clocks  and  watches,  etc.;  print- 
er's cases,  canoes  and  small  boats,  feathers,  surgical  dress- 
ings, plate-glass,  motor  vehicles,  machines  for  the  manufac- 
ture of  wood-pulp,  musical-instrument  cases,  etc. 

Special  rates  of  duty  are  granted  for  other  articles  speci- 
fied in  two  further  schedules,  C  and  D,  including  aluminum, 
laths,  sawed  boards,  iron  ore,  coal,  cement,  trees,  condensed 
milk,  biscuits,  canned  fruit,  etc. 

A  little  consideration  of  the  foregoing  categories  will 
shows  that  the  concessions  granted  by  Canada  to  the  United 
States  will  interfere  very  little  with  British  imports.  Dur- 
ing the  debate  on  the  Address  Mr.  Sydney  Buxton  pointed 


156  SELECTED  ARTICLES 

out  that  out  of  the  total  British  trade  with  Canada  of  £20,- 
000,000  only  about  £800,000  is  effected  by  the  Reciprocity 
Agreement,  so  far  as  preference  is  concerned.  Of  that 
amount  £477,000  worth  of  British  goods  still  retain  a 
preference  of  10  to  12  per  cent.,  thus  leaving  a  balance  of  no 
more  than  £316,000,  or  il/2  per  cent.,  of  British  imports  to 
Canada,  the  duties  on  which  will  in  future  be  identical  with 
those  on  American  goods.  At  the  same  time  the  reciproc- 
ity agreement  will  afford  great  relief  to  the  Canadian  no 
less  than  the  American  masses,  and  considerably  increase 
their  capacity  for  the  purchase  of  manufactured  articles, 
which  cannot  fail  to  benefit  British  trade  with  Canada. 

Many  of  the  arguments  that  have  been  used  in  the 
Press  and  in  the  recent  discussion  in  the  House  of  Com- 
mons as  to  the  effects  of  the  proposed  reciprocity  arrange- 
ment, if  ratified,  more  especially  those  dealing  with  the  ques- 
tion of  transportation  and  political  results,  simply  ignore 
existing  conditions.  A  great  deal  has  been  made  of  the 
statement,  for  instance,  that  the  traffic  flowing  now  from 
west  to  east  will  hereafter  flow  from  north  to  south,  and 
that  this  must  seriously  damage  the  great  transportation 
lines  of  Canada  as  well  as  our  own  commercial  interests. 
The  best  practical  answer  to  this  allegation  is  the  fact  that 
great  railway  men  in  Canada  and  the  powerful  interests 
which  they  represent  do  not  share  this  apprehension.  The 
way  in  which  the  enormous  traffic  now  passing  from  Can- 
ada to  the  United  States  and  vice  versa  has  been  ignored,  as 
well  as  the  large  transit  trade  of  Canadian  corn  through 
American  ports  in  the  winter  months,  reveals  a  woeful  lack 
of  study  of  the  subject.  It  seems  to  be  entirely  forgotten 
that  even  under  existing  conditions  the  total  trade  between 
the  United  States  and  Canada  considerably  exceeds  that  be- 
tween Canada  and  the  Mother  Country.  While  in  the  year 
ending  March  31,  1909,  the  total  trade  of  Canada  with  the 
United  States  was  $285,265,717,  or  say,  £59,000,000,  that 
with  Great  Britain  was  only  $204,302,113,  or  £42,000,000.  A 
further  noteworthy  circumstance  is  that  while  the  total  im- 
ports of  Canada  from  the  United  States  were  $192,661,360, 


RECIPROCITY  157 

or  more  than  double  the  amount  of  Canadian  exports  taken 
by  the  United  States,  which  amounted  to  $92,604,356,  the 
British  imports  to  Canada  were  but  little  over  half  the 
amount  of  the  exports  from  Canada  to  Great  Britain,  that 
is  to  say,  $70,556,738  worth  of  imports  as  against  $133,745,- 
375  worth  of  exports.  In  1908,  19,768,000  bushels  of  Cana- 
dian wheat  were  shipped  in  transit  through  the  following 
American  ports:  Baltimore,  Boston,  New  York,  Philadelphia, 
and  Portland,  while  506,105  barrels  of  Canadian  flour  were 
forwarded  through  the  same  ports  in  the  same  year. 

As  a  matter  of  fact,  both  in  Canada  and  the  United 
States  there  is  naturally  a  flow  from  west  to  east  of  agricul- 
tural products,  while  water  transportation  is  open  from  the 
heads  of  the  lakes  down  to  the  seaports  on  the  east  coast. 
The  wheat  areas  of  both  countries  have  to  a  large  extent  the 
-ume  outlet  at  the  head  of  Lake  Superior.  On  the  other 
hand,  there  is  a  large  traffic  north  and  south,  not  merely  in 
manufactured  goods  but  in  such  heavy  articles  as  coal,  coke, 
lumber,  etc.  No  one  who  has  visited  the  two  countries  and 
realized  what  a  purely  artificial  and  arbitrary  line  of  divi- 
sion the  customs  tariffs  have  raised  between  two  peoples 
have  so  much  in  common  in  life  and  thought,  will  be 
surprised  to  find  that  at  a  favorable  political  juncture  like 
the  present,  old  jealousies  are  being  put  aside,  sectional, 
selfish  interests  are  being  overridden,  and  common  sense 
is  having  its  way  after  a  lapse  of,  many  years.  That  the 
industrial  population  of  Maine  and  Massachusetts  should  be 
precluded  from  the  use  of  the  agricultural  produce  of  Que- 
bec, so  suitable  for  the  cultivation  of  fruit  and  vegetables; 
that  the  wheat-growers  of  Alberta  and  Saskatchewan  should 
be  cut  off  from  the  American  central  market,  with  its  grow- 
ing industrial  population;  that  two  countries  whose  coal 
deposits  are  placed  by  Nature  in  the  case  of  Canada  at  the 
extremities,  and  in  that  of  the  United  States  mainly  in  the 
center  of  a  line  of  frontier  extending  for  about  three  thou- 
sand miles, — is  a  condition  of  things  which  could  not  in 
reason  be  expected  to  continue,  and  which  no  amount  of 
artificial  straight-waistcoating  on  the  part  of  our  tariff  re- 
formers could  have  maintained  in  the  long  run. 


'  is8  SELECTED  ARTICLES 

y 

If  the  idea  that  an  extension  of  trade  between  Canada 
and  the  United  States  must  draw  the  Dominion  into  the 
political  orbit  of  its  great  neighbor  were  well  founded,  this 
process  would  already  be  manifest,  as  no  force  in  this  world 
could  permanently  prevent  the  growth  of  trade  between 
these  two  populations.  Indeed,  there  has  never  been,  nor 
is  there  now,  any  political  foundation  for  this  hypothesis. 
The  Canadian  people  are  a  very  distinct  political  entity,  and 
the  sense  of  Canada's  nationhood  is  what  most  impresses 
any  visitor  to  that  country.  Whatever  may  have  been  the 
fears  or  hopes  of  those  who  years  ago  looked  forward  to 
Canada  ultimately  entering  the  Federation  of  the  United 
States,  I  do  not  think  that  any  statesman  in  either 'country 
would  to-day,  in  spite  of  Mr.  Champ  Clark's  misunderstood 
joke,  seriously  consider  that  eventuality  as  one  worth  dis- 
cussing. * 

A  number  of  prominent  Canadians,  some  of  them  sup- 
porters of  the  tariff  reform  standpoint  in  this  controversy, 
.have  effectively  helped  to  dispose  of  the  idea  that  Great  Brit- 
ain is  likely  to  suffer  'seriously  either  from  an  economic 
standpoint  in  consequence  of  the  Reciprocity  Agreement. 
According  to  the  Daily  Mail  correspondent  at  Ottawa,  in  a 
telegram  dated  February  7,  1911,  several  Conservative  news- 
papers in  Canada  considered  that  the  Agreement  was  not 
only  a  good  thing  for  the  Dominion,  but  would  do  no  harm 
to  the  Empire.  Sir  Donald  Mann,  Vice-President  of  the 
Canadian  Northern  Railway,  goes  as  far  as  to  say  that  the 
arrangement  will  benefit  English  trade,  while  Sir  W.  Mac- 
kenzie, president  of  that  railway,  repudiates  the  idea  thai 
the  Agreement  will  throw  Canada  politically  into  the  arms 
of  the  United  States.  He  does  not  think  that  it  will,  have 
any  political  effect  whatever,  and  asserts  that  there  will  be 
no  tendency  under  it  to  weaken  the  ties  between  the  Domin- 
ion and  the  Mother  Country.  Sir  W.  Mackenzie  does  not 
believe  that  a  large  proportion  of  the  Canadian  wheat  crop 
will  be  diverted  to  the  south.  The  Americans,  he  says,  now 
produce  all  the  wheat  they  require,  and  if  they  import  wheat 
from  Canada,  they  will  themselves  have  all  the  more  to  ex- 
port. 


RECIPROCITY  159 

It  is  not  necessary  to  conclude,  as  many  here  do,  that 
the  increase  of  American  trade  means  a  diminution  of  Brit- 
ish trade  with  Canada.  In  fact,  the  figures  for  the  five 
years  1905-1909  show  that  the  trade  of  this  country  and  the 
United  States  with  Canada  has  increased  concurrently  with- 
in that  period.  In  a  great  number  of  products  England 
cannot  possibly  compete  with  the  United  States  in  the  Ca- 
nadian market,  as  is  evident  when  it  is  remembered  that  to 
a  large  extent  Canada's  imports  from  the  United  States 
consists  of  commodities  such  as  agricultural  produce,  in- 
cluding bread-stuffs,  sugar,  and  raw  tobacco;  animal,  fishery, 
and  forest  products;  and  minerals  comprising  coal,  oils, 
and  ores.  In  the  matter  of  manufactures,  the  fact  that  the 
liubits  and  conditions  of  life  of  the  Canadians  are  so  similar 
to  those  of  the  States  give  a  great  advantage  to  American 
manufacturers.  The  latter  are  already  making  articles  for 
their  own  immense  market  which  are  equally  suitable  for 
Canadian  requirements.  The  English  manufacturer,  on  the 
other  hand,  is  in  a  very  different  position,  .as,  in  order  fully 
to  meet  the  Canadian  demand,  he  would  nave  to  establish 
special  departments,  new  designs,  models  and  patterns 
adapted  to  the  local  conditions  of  what  is  for  him,  up  to 
the  present,  a  relatively  small  market.  When  in  Canada  I 
heard  many  complaints  of  a  certain  want  of  adaptability  on 
the  part  of  British  manufacturers  to  the  requirements  of 
their  Canadian  customers,  and  of  an  unwillingness  either  to 
>tudy  or  to  comply  with  local  requirements,  with  the  re- 
sult that  many  merchants  who  preferred  English  goods  ow- 
ing to  their  superior  workmanship  were  unable  to  sell  them. 
Another  advantage  enjoyed  by  the  American  manufacturer 
is  proximity  to  his  customer,  which  enables  both  to  enter 
more  easily  into  direct  personal  relations. 

To  compensate  for  these  natural  disadvantages,  English 
manufacturers  will  have  to  devote  more  money  and  thought 
to  the  establishment  in  Canada  of  stocks,  warehouses,  and 
other  facilities  with  the  object  of  enabling  their  customers 
readily  to  obtain  supplies  of  spare  parts  and  all  those  little 
details  that  mean  so  much  in  the  conduct  of  industrial  en- 


160  SELECTED  ARTICLES 

terprises,  and  in  the  smooth  working  of  their  daily  routine. 
Our  firms  would  also  need  to  organize  a  more  energetic  prop- 
aganda for  British  goods  in  the  Dominion,  and  to  take  into 
account  the  necessity  of  relieving  themselves  as  far  as  cir- 
cumstances permit  of  the  handicap  imposed  by  the  difference 
in  currency  and  weights  in  Canada.  They  should  accom- 
modate themselves  to  Canadian  requirements  in  those  re- 
spects, and  base  their  calculations  on  the  dollar  currency 
and  on  the  short  ton  of  2000  lb.,  which  is  universally  adopted 
on  the  North-American  continent.  There  can  be  no  doubt 
that  a  certain  revision  of  the  methods  of  British  manufac- 
turers in  these  respects  would  do  much  to  increase  the  sale 
of  English  goods,  the  solidity  and  high  quality  of  which  are 
fully  appreciated  by  the  Canadians,  who  would  be  glad  to  do 
business  with  our  firms  in  preference  to  any  other  if  a  great- 
er attention  to  their  requirements  made  it  possible  for  them. 
There  is  a  huge  business  awaiting  our  manufacturers  in  the 
Dominion,  a  vast  country  with  unlimited  resources,  and  a 
rapidly  growing  market,  in  which  closer  attention  and 
greater  energy  will  do  far  more  to  foster  their  trade  than 
tariff  crutches,  with  their  paralyzing  influence  on  enterprise. 
Although  it  may  be  a  long  time  before  a  state  of  abso- 
lute free  trade  comes  into  existence  between  the  two  great 
kindred  states  of  North  America,  it  is  now  quite  clear  that 
there  the  apostles  of  high  protection  have  had  their  day. 
How  far  this  swing  of  the  pendulum  may  lead  in  the  im- 
mediate future  to  a  further  demolition  of  tariff  walls  it  is 
difficult  to  forecast.  The  moral  effect,  however,  of  the 
practical  proof  in  both  countries  that  the  free  exchange  of 
products  leads  to  greater  prosperity  and  not  to  mutual  de- 
struction, cannot,  if  properly  emphasized,  be  lost  upon  the 
intelligent  democracies  of  the  two  most  progressive  States 
of  the  American  Continent.  All  those  who  hold  that  an  in- 
. crease  in  the  world's  trade,  the  reduction  of  artificial  bar- 
riers, and  the  most  economic  use  of  the  varied  potentialities 
of  the  earth  are  a  gain  for  humanity  must  rejoice  to  think 
that  a  great  step  in  the  direction  of  universal  free  trade  has 
been  taken  in  the  conclusion  of  the  Reciprocity  Agreement 
between  Canada  and  the  United  States. 


RECIPROCITY  161 

Nation.  92:  158-9.  February  16,  1911. 
Canada's  Free   Hand. 

Mr.  Balfour  has  condemned  the  Canadian  reciprocity 
agreement  as  "an  imperial  disaster."  To  the  "tariff-reform" 
Imperialists,  the  probability  that  effect  will  be  given  to  the 
agreement  is,  indeed,  galling.  But  Mr.  Balfour  is  the  first 
British  statesman  to  denounce  any  of  the  attempts  in  the 
past  sixty-five  years  to  establish  reciprocal  trade  between 
Canada  and  the  United  States.  In  Canada  and  in  the  other 
over-sea  possessions  of  Great  Britain,  this  new  Imperial- 
ism must  come  with  a  shock — for  if  it  means  anything,  it 
means  that  the  new  Imperialism  would  impair  the  absolute 
fiscal  freedom  which  the  self-governing  colonies  have  en- 
joyed since  1846.  This  accrued  to  the  colonies  partly  by 
accident.  Sooner  or  later  it  must  have  been  conceded  to 
them. 

It  was  Peel's  reforms  of  1846  that  gave  the  larger  col- 
onies their  new  freedom,  simply  because,  when  it  was  no 
longer  the  policy  of  England  to  maintain  protective  tariffs, 
it  ceased  to  be  possible  to  intertwine  the  tariffs  of  the  col- 
onies with  the  British  fiscal  system.  Within  ten  or  twelve 
years  were  enacted  tariffs  for  Quebec  and  Ontario  in  which 
there  were  duties  intended  to  protect  Canadian  manufac- 
turers from  British  competition.  British  manufacturers — in 
particular  the  iron  and  steel  interests  of  Sheffield  and  Glas- 
gow— vigorously  protested  to  the  Colonial  Office  against 
these  Canadian  taxes.  The  Duke  of  Newcastle,  then  colo- 
nial minister,  sympathized  with  the  British  manufacturers, 
and  made  some  remonstrance  to  Gait,  the  Canadian  minister 
of  finance.  But  Gait  was  only  extending  a  policy  that  has 
been  begun  a  year  earlier  by  Gayley;  and  his  reply  to  the 
Colonial  Office  was  that  self-government  would  be  annihilat- 
ed if  the  views  of  the  Imperial  government  on  colonial  fis- 
cal questions  were  preferred  to  those  of  the  people  of  Can- 
ada. "It  is,  therefore,"  he  continued  in  his  letter  to  New- 
castle, "the  duty  of  the  present  government  distinctly  to 
affirm  the  right  of  the  Canadian  Legislature  to  adjust  the 


162  SELECTED  ARTICLES 

taxation  of  the  people  in  the  way  they  deem  best — even  if 
it  should  unfortunately  happen  to  meet  with  the  disapproval 
of  the  Imperial  Ministry.  Her  Majesty  cannot  be  advised 
to  disallow  such  acts,  unless  her  advisers  are  prepared  to  as- 
sume the  administration  of  the  affairs  of  the  colony,  irre- 
spective of  the  views  of  its  inhabitants."  The  royal  assent 
was  not  withheld;  and  since  that  time  a  British  government 
has  never  intervened  to  prevent  the  enactment  of  a  protec- 
tionist tariff  in  any  of  the  over-sea  dominions.  Since  1859, 
there  is  not  one  of  the  self-governing  colonies  that  has  not 
sought  to  protect  domestic  industries  from  the  competition 
of  British  manufacturers. 

Even  before  the  Gait  and  Newcastle  controversy  of  1859 
settled  it  that  fiscal  freedom  went  with  responsible  govern- 
ment for  the  colonies,  the  British  government  had  been  will- 
ing to  assist  in  bringing  about  reciprocal  trade  between  the 
United  States  and  the  British  North  American  Provinces. 
They  were  not  prepared  for  the  sudden  change  which  came 
in  1846.  Montreal  and  Canada  complained  that  bankruptcy 
faced  Quebec  and  Ontario  with  the  ending  of  preferences 
for  their  exports.  Gladstone,  who  was  then  under-secretary 
for  the  colonies,  was  reassuring.  But  it  was  said  that  Great 
Britain,  in  establishing  free  trade  with  the  world,  had  not 
guarded  the  interests  of  Canada.  It  was  insisted  that  Eng- 
land, when  throwing  open  her  ports,  to  American  grain, 
should  have  stipulated  with  the  United  States  for  reciprocity 
for  Canada.  The  Elgin-Marcy  Treaty  was  the  result  of  the 
appeal  to  London  from  the  North  American  Provinces. 
Twice  since  the  abrogation  of  the  treaty,  Great  Britain  has 
used  her  good  offices  to  effect  a  return  to  some  such  sys- 
tem of  free  exchange  between  the  United  States  and  Canada 
as  was  in  existence  from  1854  to  1866.  Were  Mr.  Balfour 
at  this  time  Prime  Minister,  and  were  Canada  as  now  intent 
on  obtaining  reciprocity,  his  government  would  not  dare  to 
withhold  any  diplomatic  aid  that  might  be  necessary. 

4  Canada  is  the  only  Dominion  whose  trade  interests  can 
be  much  advanced  by  a  reciprocity  agreement  with  a  non- 
British  country.  Yet  all  the  colonies  would  have  been 


RECIPROCITY  163 

alarmed  had  the  utterances  of  Mr.  Balfour  come  from  the 
Prime  Minister.  In  Mr.  Balfour,  they  are  understandable 
in  view  of  recent  developments  in  both  England  and  Canada. 
Three  times  since  1906  the  British  electorate  has  repudiated 
the  scheme  for  a  protective  tariff  with  preference  for  the 
colonies.  In  Canada  the  Manufacturers'  Association  has 
repeatedly  served  notice  on  the  Ottawa  government  that 
there  can  be  no  British  preferences  in  the  Canadian  tariff 
which  leave  Canadian  industries  without  protection  against 
all  comers;  and  there  were  many  curtailments  of  the  British 
preference  when  the  tariff  was  revised  in  1907.  The  repudia- 
tion of  the  Chamberlain  plan  was  the  second  serious  set- 
back in  Canada  that  the  movement  for  protection  begun  in 
England  in  1903  has  received.  A  third  setback  is  the  pro- 
posed free  trade  in  all  natural  products  between  the  United 
States  and  Canada.  Canada  is  the  keystone  of  the  arch  of 
the  Chamberlain-Milner  Imperialists;  and  it  is  easy  to  un- 
derstand why  Balfour  takes  the  gloomy  view  that  reciprocity 
between  the  United  States  and  Canada  is  an  Imperial  dis- 
aster. 

Nation.  92:  184-5.  February  23,  ign. 
Reciprocity  and  the  Farmers. 

The  trade  agreement  with  Canada  should  sst  our  farmers 
to  doing  some  thinking  about  the  effects  of  high  tariff  duties 
on  their  business.  They  have  been  ready  to  believe  it  when 
they  were  told  that,  because  other  countries  cinnot  send  us 
their  farm  products  without  paying  heavy  duties,  therefore 
our  farmers  are  "protected."  Manufacturers  and  politicians 
have  presumed  on  the  gullibility  of  the  farmers.  That  they 
have  done  this  with  so  much  success  is  one  of  the  curious 
facts  of  our  tariff  history.  Perhaps  farmers  a-e  a  bit  slow 
to  look  into  a  complicated  system  that  oppresses  them.  In 
I  ranee  of  the  eighteenth  century,  it  has  been  veil  said  that 
the  farmers  were  the  mules  of  the  Old  Regime.  They  car- 
ried the  burdens;  the  other  classes  had  whatever  advan- 
tages there  were.  When  the  French  peasants  filially  woke  up 


164 


SELECTED  ARTICLES 


to  the  situation,  they  became  the  mainstay  of  the  Revolu- 
tion. One  may  hope  that  our  farmers,  too,  are  on  the  eve 
of  a  great  awakening^  For,  as  a  class,  they  gain  nothing 
from  the  tariff;  on  the  contrary,  they  suffer  a  huge  eco- 
nomic loss  every  year  from  its  operation.  ^- 

If  the  farmer  studies  the  case,  he  will  discover  that,  in  the 
first  place,  our  tariff  does  not  and  cannot  raise  the  prices  of 
our  agricultural  staples.  These  are  constantly  exported; 
they  have  to  find  their  markets  abroad,  and  must  accept  the 
prices  that  result  from  competition  with  similar  products 
from  Canada,  Argentina,  Russia,  and  all  other  farming 
countries./' The  price  of  wheat  in  Liverpool  is  surely  not 
''protected"  by  our  tariff.  And  since  the  price  of  wheat  sold 
at  home,  for  consumption  here,  cannot  even  equal  the  Liver- 
pool figure,  it  is  as  clear  as  day  that  our  tariff  duty  on 
wheat  has  never  added  a  cent  to  the  price  of  wheat  in  the 
United  States.  And  what  is  true  of  wheat  is  true  of  all 
other  farm  products  that  enter  into  our  export  trade.  If 
our  duties  exclude  some  Canadian  wheat,  barley,  meat,  etc., 
the  only  effect  is  to  increase  Canada's  export  of  those  ar- 
ticles to  Europe,  where  our  products  must  meet  their  com- 
petition, and  stibmit  to  the  resulting  price.  And,  we  repeat, 
this  European  price  governs  the  price  here.  Clearly,  there- 
fore, if  our  farmers  will  consider,  they  cannot  fail  to  see 
what  an  empty  favor  the  tariff  on  farm  products  offers  them. 

But  this  is  far  from  being  the  whole  case:  it  is  only  one 
side  of  it — the'side  of  no  gain.  Now  for  the  loss.  This  falls 
under  two  distinct  heads.  First,  the  obvious  loss  to  our 
farmers  from  having  to  pay  high  prices  for  most  of  the 
things  they  buy  for  their  own.  consumption.  The  prices  of 


nearly  all  ma 
at  home,  are 
any  of  the  th 


lufactured  articles,  whether  imported  or  made 
nhanced  by  the  tariff.  When  the  farmer  buys 
nisand  and  one  articles  needed  for  himself  and 


his  family,  he  pays  prices  made  higher  by  the  tariff  than  they 
would   be   wiihout  it.     That   is   what   the   tariff  on   manufac- 


tures is  for. 
boozle  the  f 
different  ma 


The  tariff  on  farm  products  is  meant  to  bam- 
mers.  But  the  tariff  on  manufactures  is  a  very 
er.  The  prices  of  our  manufactures  are  not 


RECIPROCITY  165 

fixed  in  free  competition  with  all  the  world.  The  tariff  wall 
comes  between. 

This  immediate  and  direct  loss  appears  at  once  when  a 
tariff  is  set  up  in  a  country.  The  producers  of  exports  lose 
as  buyers  of  other  commodities.  But  there  is  another  and 
probably  greater  loss  that  comes  slowly  and  indirectly.  It 
is  more  difficult  to  explain,  because  it  depends  on  the  work- 
ing of  more  obscure  though  quite  irresistible  laws  of  trade. 
A  tariff  wall  disturbs  the  natural  movement  of  money  be- 
tween countries.  It  does  not  at  once  diminish  exports,  but 
does  diminish  imports.  The  customer  countries  have  to  re- 
mit money  instead  of  the  goods  they  formerly  sent.  This 
movement  of  money  goes  on  through  a  term  of  years  until 
a  new  equilibrium  of  trade  is  reached  in  which  each  coun- 
try's exports  are  again  roughly  equal  to  its  imports.  One 
of  the  forces  at  work  to  reestablish  equilibrium  is  the  ris- 
ing scale  of  prices  in  the  tariff  country.  The  inflow  of  mon- 
ey has  this  sure  result  in  the  course  of  years.  Producers 
of  exports  feel  this  rise  of  prices  in  all  things  that  they  buy; 
but  in  selling  their  own  product  they  get  no  rise,  for  the 
price  of  their  product  depends,  even  at  home,  on  the  price 
it  commands  abroad.  That  is  the  precise  position  of  Ameri- 
can farmers  to-day. 

In  thi>  indirect  price-raising  by  the  tariff,  as  in  the 
direct  and  immediate  effect,  farmers  have  no  share  as  re- 
gards their  own  product.  Their  costs  of  producing  are  in- 
creased: they  pay  more  money  for  labor  and  implements, 
and  their  family  purchases  are  at  raised  figures.  But  the 
prices  of  their  exportable  crops  are  in  fact  lowered,  for  they 
are  fixed  in  other  countries  where  the  supply  of  money  is 
relatively  small — fixed  by  the  cost  of  producing  similar  crops 
in  countries  where  money  goes  farther  in  paying  costs.  So 
our  farmers  are  burdened  by  the  indirect  operation  of  the 
tariff. 

Does  some  one  think  that  in  saying  the  tariff  causes 
our  country  to  'have  a  greater  supply  of  money  than  it 
would  have  without  the  tariff,  we  give  a  conclusive  argu- 
ment in  favor  of  the  tariff?  Why,  a  common  laborer  has 


1 66  SELECTED  ARTICLES 

been  heard  explaining  to  his  companion  that  if  you  get 
two  dollars  where  you  formerly  got  only  one,  but  have  to 
pay  two  dollars  for  what  formerly  cost  you  only  one,  you 
have  gained  nothing.  That  is  good  sense  and  good  political 
economy.  Unfortunately  for  our  farmers,  their  case  is  dif- 
ferent. They  get  no  increase  of  price  by  the  tariff,  but 
have  to  pay  more  for  what  they  buy.  The  excess  of  money 
brings  them  only  damage  and  loss.  Can  they  wonder  that 
they  are  so  often  disappointed  at  the  results  of  their  labors? 


Review  of  Reviews.  28:  462-6.  October,  1903. 

Future  of  Canada  and  Reciprocity  with  the  United  States. 
Eugene  G.  Hay. 

There  was  but  little  difference  in  time  in  the  settlement 
of  the  Canadian  provinces  and  the  colonies  that  in  1/89  be- 
came the  United  States  of  America.  They  were  settled  by 
substantially  the  same  race  of  men.  In  1867,  when  the  Do- 
minion government  was  formed,  the  United  States  had  be- 
come a  great,  mighty,  prosperous  nation,  stretching  from 
the  Atlantic  to  the  Pacific,  while  the  Canadian  provinces 
had  progressed  but  slowly.  Since  the  formation  of  the 
Dominion  government,  the  growth  of  the  Canadian  prov- 
inces has  been  far  more  rapid,  yet  how  insignificant  when 
compared  with  the  mighty  strides  the  United  States  has  made 
during  this  period.  The  acceleration  which  came  to  Can- 
ada with  the  formation  of  the  Dominion  government  was 
the  result  of  that  unity  of  action  which  was  thus  made  pos- 
sible; that  it  has  not  grown  and  developed  as  the  United 
States  has,  is  the  result  of  the  impossibility  of  independent 
action  that  is  inherent  in  its  colonial  existence.  It  is  pos- 
sible that  colonial  government  may  be  wisely  administered, 
that  it  may  be  honestly  administered,  yet  under  it  a  people 
can  never  become  great.  Their  resources  can  never  be  fully 
developed,  their  enterprise  and  their  energy  can  never  have 
full  play,  and  their  inventive  genius  can  *never  reach  its  full 
limit.  Their  commerce,  which  is  the  chief  factor  in  national 


RECIPROCITY  167 

greatness,  is  necessarily  held  by  the  same  leading  strings 
that  guide  their  political  existence.  A  people  to  become 
truly  great  must  live  under  a  government  that  can  do  busi- 
ness with  other  governments;  a  government  that  can  have 
a  foreign  policy  of  its  own,  and  diplomatic  and  commercial 
relations  with  the  other  governments  of  the  world. 

Canada  Hampered  in   Trade  Relations 

The  industrial,  commercial,  and  political  interests  of 
Canada  are  essentially  Canadian,  essentially  cisatlantic;  yet 
under  the  anomalous  governmental  conditions  under  which 
the  Dominion  exists,  its  interests  are  necessarily  bound  up 
with  British  interests,  scattered  as  they  are  over  every  con- 
tinent. Canada  has  now  reached  that  point  where  its  rela- 
tions with  other  countries  require  individual  treatment. 
This,  under  existing  conditions,  is  difticuh  if  not  impossible. 
In  the  great  political  centers  of  the  world,  Canada  has  no 
diplomatic  representative;  in  the  great  commercial  cities,  it 
has  no  consuls.  An  army  of  trained  men  are  reporting  to 
Washington,  each  day,  the  conditions  of  commerce  in  the 

at  centers  of  population;  these  men  are  constantly  alert 
to  extend  American  commerce  in  the  cities  and  countries 
win-re  they  are  stationed.  Canada  must  secure  all  informa- 
tion from  London,  and  every  move  to  extend  her  commerce 
must  be  through  a  British  representative.  His  duties  require 
him  to  have  first  in  mind  the  interests  of  the  mother  coun- 
try, and  in  looking  after  Canadian  interests  he  must  do  it 
with  reference  to  the  interests  of  Australia,  of  South  Africa, 
of  India,  and  of  the  islands  of  the  sea. 

,///   J'.nipirc  of  drain   1'ichis 

This  was  all  well  enough  when  Canada  was  composed 
of  a  few  fishing  settlements  that  fringed  the  Atlantic  coast, 
and  Quebec  and  Montreal  were  on  the  frontier.  Now  it 
stretches  three  thousand  miles  west  from  Montreal,  and 
northwest  to  the  far-distant  head  waters  of  the  Yukon. 
Lacked  in  the  mountains  of  the  Canadian  possessions  is 


168  SELECTED  ARTICLES 

mineral  wealth  second  only  to  that  of  the  United  States, 
while  her  agricultural  possibilities  can  scarce  be  exaggerat- 
ed. Between  the  Lake  of  the  Woods  and  the  Caribou  Moun- 
tains the  forces  of  civilization  are  building  a  mighty  empire, 
destined  soon  to  become  the  granary  of  the  world.  The 
province  of  Manitoba  and  the  districts  of  Assiniboia,  Al- 
berta, and  Saskatchewan  extend  400  miles  north  and  south 
and  900  miles  east  and  west,  embracing  an  area  of  359,ooo 
square  miles.  Add  to  this  Athabasca,  with  its  122,000  square 
miles,  in  which  is  situated  the  beautiful  Peace  River  Valley, 
said  to  be  as  fertile  and  productive,  as  the  valley  of  the  Red 
River  of  the  North,  and  we  have  an  area  of  almost  half  a 
million  square  miles.  In  the  light  of  the  development  of 
our  own  great  Western  prairies,  is  it  too  much  to  say  that 
one-half  of  this  is  arable,  and  will  eventually  come  under 
the  plow.  More  than  one-third  of  it  lies  west  of  the  one 
hundred  and  fifth  meridian.  Forty  years  ago,  the  man  who 
would  have  predicted  that  the  time  would  come  when  200,- 
000,000  bushels  of  wheat  would  be  raised  in  the  United 
States  north  of  the  forty-fifth  parallel,  and  between  the  con- 
tinental divide  and  the  Rocky  Mountains,  would  have  been 
set  down  as  insane.  Yet  that  is  what  has  happened.  Is  it 
not,  then,  within  the  bounds  of  conservative  statement  to 
say  that  within  the  lives  of  the  present  generation  200,000 
square  miles  of  this  Canadian  territory  will  be  under  culti- 
vation? Scarce  2  per  cent,  of  this  land  was  cultivated  last 
year,  yet  they  raised  60,000,000  bushels  of  wheat  and  suf- 
ficient other  small  grain  to  bring  the  total  grain  production 
to  more  than  100,000,000  bushels.  Seventy-five  thousand  set- 
tlers entered  this  territory  last  year,  and  more  than  one 
hundred  thousand  more  will  make  their  homes  there  this 
year.  When  settled  as  thickly  as  our  own  Western  prairies 
are  to-day,  it  will  afford  a  market  for  everything  required  in 
a  grain-growing  country  unequaled  on  this  continent.  Un- 
less her  progress  shall  be  arrested  by  political  conditions, 
the  next  generation  will  see  the  center  of  Canadian  popula- 
tion and  power  in  the  basin  of  Lake  Winnipeg.  Canada 
must  then  have  a  population  of  more  than  twenty  millions 
of  people. 


RECIPROCITY  169 

Canada  Must  Work  Out  Her  Own  Salvation 

Will  such  a  people,  possessed  of  such  boundless  wealth, 
permit  it  to  remain  undeveloped,  and  their  progress  retarded 
by  outgrown  political  institutions?  If  they  do,  they  will 
prove  false  to  Anglo-Saxon  traditions!  Could  twenty  mil- 
lions of  people,  possessed  of  such  diversified  interests,  re- 
spond to  the  leading  strings  of  colonial  government?  This 
question  carries  its  own  answer.  What,  then,  is  the  ultimate 
destiny  of  Canada?  Those  Americans  who  talk  of  the 
United  States  annexing  Canada,  either  by  force  of  arms  or 
by  a  tariff  policy  that  excludes  Canadian  products  from  our 
markets,  woefully  misunderstand  the  temper  and  the  spirit 
of  the  race  to  which  they  belong.  Let  them  remember  that 
a  country  peopled  by  Anglo-Saxons  has  never  been  annexed. 
In  thinking  of  forcible  annexation  they  forget  the  "Spirit  of 
Seventy-six"  and  the  race  in  which  it  was  aroused.  The 
policy  of  commercial  exclusion  has  proven  a  dismal  failure. 
When,  in  1866,  our  government  annulled  the  reciprocity 
treaty  of  1854,  it  was  thought  that  the  United  States  was 
Canada's  only  market,  and  from  time  to  time,  as  our  tariffs 
have  been  raised,  misguided  statesmen  have  expected  to  see 
Canada  forced  into  suing  for  annexation.  Not  so!  Our 
market  was  their  natural  market,  but  when  it  was  denied 
them,  they  sorrowed,  but  not  in  despair;  disappointed  they 
were,  but  not  discouraged,  and  like  the  race  to  which  they 
belong,  wherever  found  upon  the  round  globe,  they  turned 
their  energies  to  making  the  best  of  the  opportunity  that 
was  left  them.  They  have  found  other  markets  for  their 
products,  and  prospered.  What,  then,  of  the  future?  That 
the  people  of  Canada  will  work  out  their  own  destiny  there 
can  be  no  doubt.  That  they  may  be  helped  or  hindered  by 
the  action  of  our  government  is  equally  certain.  Canada 
must  eventually  either  become  an  independent  nation,  or  by 
the  free,  voluntary  act  of  her  people  and  the  consent  of  the 
people  of  this  country,  become  a  part  of  the  United  States, 
as  Texas  did,  upon  terms  of  full  and  complete  equality.  As 
to  which  is  the  more  alluring;  as  to  which  presents  the  best 


i;o  SELECTED  ARTICLES 

opportunity  for  the  development,  progress,  and  prosperity 
of  Canada;  as  to  which  wjll  most  accelerate  the  solution  of 
those  ethical  and  moral  problems  in  which  the  people  of 
each  country  have  a  common  interest,  it  is  idle  for  us  on 
this  side  of  the  line  to  discuss,  for  it  is  a  question  that  must 
and  will  be  settled  by  the  Canadian  people. 

The  Tariff  Wall 

But  whether  Canada's  future  is  to  become  a  free  and 
independent  nation,  or  a  part  of  the  American  Union,  the 
commercial  relations  between  the  two  countries  should  be 
as  free  and  unrestricted  as  it  is  possible  to  make  them.  Ex- 
perience has  demonstrated  that  the  easiest  and  least  burden- 
some method  of  providing  for  public  revenues  is  by  tariff 
duties. '  But  aside  from  making  provision  for  fiscal  necessi- 
ties, our  justification  for  a  protective  tariff  is  the  protection 
of  our  high  civilization  by  upholding  the  American  wage 
standard.  As  between  the  United  States  and  Canada  the 
reason  for  this  does  not  exist,  and  our  tariffs  against  the 
products  of  Canada  operate  as  an  unnecessary  and  harmful 
restraint  of  trade,  v  All  will  agree  that  no  harm  could  come 
to  the  great  commercial  interests  of  New  York  or  New  Eng- 
land if  Ontario  and  Quebec  should  be  admitted  as  states  of 
the  American  Union.  The  freedom  of  trade  between  the 
States  and  the  vast  territory  over  which  our  commerce  ex- 
tends without  restriction  or  hindrance  has  been  the  most 
potent  factor  in  our  prosperity;  to  increase  that  territory  by 
adding  contiguous  states,  peopled  by  the  same  class  of  peo- 
ple, maintaining  the  same  civilization,  with  similar  political  in- 
stitutions, would  therefore  increase  that  prosperity.  Meas- 
urably the  same  results  may  be  attained  without  a  political 
union.  VTo  abolish  all  tariffs  between  the  United  States  and 
Canada  would  greatly  enhance  the  commercial  interests  of 
both  countries.  This  condition,  however,  cannot  be  brought 
about  at  once,  owing  to  the  fiscal  necessities  of  the  Domin- 
ion government,  as  for  some  time  to  come  Canada  must 
derive  a  large  part  of  her  necessary  revenues  from  customs 
duties  on  commodities  that  could  be  bought  in  the  United 
States.  * 


RECIPROCITY  17, 

The  British  Zollverein  Proposition 

Secretary  Chamberlain's  proposition  to  create  a  British 
tariff  for  the  purpose  of  establishing  colonial  reciprocity  is 
an  attempt  to  save  the  empire  which  the  elder  Pitt  created. 
But  his  task  is  greater  even  than  was  that  of  Lord,  Chatham. 
The  problem  that  confronts  him  in  the  twentieth  century  is 
entirely  commercial,  while  in  the  eighteenth  century,  in  the 
establishment  of  England's  colonial  empire,  her  great  prime 
minister  had  the  powerful  aid  of  war  and  military  conquest. 
That  momentous  tragedy  on  the  heights  of  Abraham,  which 
changed  the  history  of  this  continent,  could  not  be  enacted 
with  the  same  results  in  the  twentieth  century.  The  mighty 
currents  of  commerce  cannot  be  permanently  diverted  from 
their  natural  channels,  and  had  Chamberlain  the  genius, 
the  wisdom,  and  the  undaunted  spirit  of  him  who  by  com- 
mon voice  was  the  most  powerful  minister  that  ever  guided 
the  foreign  policy  of  England,  his  efforts  would  yet  be  fore- 
doomed to  failure.  His  proposition,  stripped  naked,  is  to 
tax  the  breakfast  table  of  every  man  in  England,  be  he  rich 
or  poor.  For  what  is  he  asked  to  pay  this  tax?  No  benefit 
will  inure  to  him,  for  the  duty  is  to  be  placed  on  articles 
which  England  consumes,  but  does  not  produce.  Its  sole 
purpose  is  to  hold  the  colonies  to  the  mother  country,  for 
Secretary  Chamberlain  doubtless  sees,  what  men  less  wise 
than  he  have  discerned,  the  impending  danger  of  the  dis- 
memberment of  the  British  Empire,  not  through  any  desire 
of  the  colonies  to  throw  off  an  oppressive  yoke,  but  that 
they  may  expand  and  grow  to  the  commercial  importance 
their  natural  advantages  give  them.  It  is  asking  more  than 
patriotism  has  yet  been  credited  with  to  expect  the  people 
of  England  to  impoverish  themselves  in  order  that  it  may 
continue  to  be  said  that  ''England's  drum-beat  follows  the 
sun  in  its  course." 

Reciprocity   with    the    United  States  more   Desirable 

But  what   is   Canada's  interest  in   this   English   preferen- 
tial?    To  have  her  grain  given  a  preference  in  the   English 


172  SELECTED  ARTICLES 

market,  she  is  to  continue  to  give  English  manufacturers  an 
exclusive  preference  in  the  Canadian  market.  Such  English 
manufactures  as  can  be  sold  in  Canada,  even  with  a  prefer- 
ential duty,  are  such  as  are  sold  chiefly  in  the  Maritime  prov- 
inces, Quebec,  and  Ontario.  These  provinces  produce  but 
little  grain  to  be  benefitted  by  the  English  food-stuff  prefer- 
ential, and  Manitoba  and  the  adjoining  grain-growing  dis- 
tricts would  derive  far  greater  benefit  from  reciprocity  with 
the  United  States  than  any  reciprocity  England  could  give. 
The  admission  of  wheat,  the  great  staple  product  of  this 
great  western  country,  into  the  United  States  free  of  duty 
would  be  of  far  more  value  to  them  than  any  preferential 
tariff  England  could  adopt,  and  this,  too,  without  injury  to 
the  wheat  growers  of  the  United  States.  Liverpool,  where 
the  surplus  wheat  of  the  world  is  marketed,  will  continue  to 
fix  the  price  for  Canada  and  for  the  United  States,  whether 
England  adopts  a  discriminating  duty  or  the  United  States 
tariff  is  taken  off  of  Canadian  wheat,  or  whether  both  of 
these  events  transpire.  But  the  facilities  for  transporting, 
handling,  and  manufacturing  the  grain,  which  the  Canadian 
farmer  could  avail  himself  of  if  he  had  free  access  to  the 
American  market,  would  be  of  more  benefit  to  him  than  the 
slight  tax  England  could  place  upon  the  grain  coming  from 
other  countries.  But  of  still  greater  value  to  the  Canadian 
farmer  would  be  the  reduction  of  the  duty  on  farm  machin- 
ery, which  is  almost  certain  to  be  provided  for  in  any  reci- 
procity treaty  that  might  be  negotiated. 

He  now,  to  a  large  extent,  buys  American  machinery  be- 
cause it  is  of  high  quality  and  best  adapted  to  his  needs, 
paying  for  it  the  American  price  plus  from  20  to  35  per  cent, 
duty.  The  rapid  growth  and  development  of  the  vast  new 
country  in  western  Canada  makes  this  a  matter  of  transcend- 
dent  importance  both  to  the  Canadian  farmer  and  the  Ameri- 
can manufacturer.  Here,  then,  is  an  instance  of  genuine  reci- 
procity. In  exchange  for  the  free  admission  of  Canadian 
wheat  to  the  American  market,  by  which  those  interested 
on  both  sides  of  the  line  are  to  be  benefitted,  the  Canadian 
duty  on  farm  machinery  will  be  reduced,  to  the  advantage 


RECIPROCITY  173 

also  of  those  interested  in  both  countries.  If  we  travel 
along  the  border,  observing  the  products  that  could  be 
interchanged,  we  cannot  help  but  be  impressed  with  many 
instances  similar  to  that  just  cited.  Remove  the  tariff  on 
lumber  and  our  Western  lumbermen  will,  by  reason  of  ad- 
vantageous transportation,  contiguous  territory,  and  other 
natural  causes,  supply  the  lumber  to  build  the  homes  for 
the  settlers  in  the  new  Canadian  northwest,  while  further 
east  the  forests  of  Ontario  will  supply  the  demand  for  this 
commodity  in  our  older  States,  from  which  the  timber  has 
long  since  been  cut.  Coal  is  another  item.  New  England 
is  badly  in  need  of  Nova  Scotian  coal  and  the  coal  miners 
of  Nova  Scotia  badly  want  the  New  England  market.  Mov- 
ing further  west,  the  coal  of  Pennsylvania  is  wanted  in  cen- 
tral Canada,  and  can  be  placed  in  the  yards  and  bins  of  the 
consumer  far  cheaper  than  coal  from  any  other  place. 

i/Geography  and  climate  conspire  to  demand  the  largest 
possible  freedom  of  trade  between  the  countries.  The  lines 
of  commerce  run  with  those  of  longitude  as  surely  as  those 
of  immigration  run  with  those  of  latitude,  and  as  years  go 
by,  and  the  countries  become  more  densely  populated,  it 
will  be  more  and  more  apparent  that  the  products  of  our 
warmer  climate  can  be  profitably  exchanged  for  those  of 
"Our  Lady  of  the  Snows."  Glance  at  the  map  of  North 
America  and  see  what  geography  is  certain  to  do  in  making 
these  two  countries  commercially  one.  In  commerce,  the 
transportation  of  commodities  to  market  is  the  most  im- 
portant factor,  and  whatever  conditions  the  machinations  of 
men  may  temporarily  bring  about,  eventually  the  lines  of 
transportation  will  be  determined  by  distance  and  resistance. 
Nature  selects  the  route  of  least  resistance;  following  this 
natural  law,  the  commerce  of  the  world  will  eventually  trav- 
el over  the  shortest  route  and  that  which  affords  the  least 
obstacles  to  transportation.  Aside  from  the  Maritime  prov- 
inces, the  shortest  route  from  every  city  and  all  produc- 
tive parts  of  Canada  to  the  Atlantic  seaboard  is  through 
the  United  States.  More  than  half  of  the  population  of 
Canada  lies  south  of  an  east  and  west  line  that  would  run 


174  SELECTED  ARTICLES 

through  Grand  Forks,  North  Dakota,  and  such  a  line  drawn 
through  Ottawa,  the  capital  of  the  Dominion,  would  strike 
to  Portland,  Oregon,  at  its  western  terminus  and  bisect  the 
slate  of  Maine  as  it  approached  the  Atlantic.  Without  pur- 
suing the  subject  further,  it  is  safe  to  say  that,  with  un- 
natural barriers  removed,  the  sum  saved  in  transporting  the 
products  of  Canada  to  their  best  markets  would  go  a  long 
way  toward  paying  the  fiscal  expense  of  the  Dominion  gov- 
ernment. 

The  Elgin   Treaty  of  1854 

Largely  through  the  energy,  the  tact,  and  the  skill  of 
Lord  Elgin,  then  Governor-General  of  Canada,  there  was 
negotiated  and  ratified,  in  1854,  a  commercial  treaty  between 
the  United  States  and  the  Canadian  provinces.  This  treaty, 
by  its  terms,  was  to  continue  for  a  period  of  ten  years,  and 
continually  thereafter  until  twelve  months  after  either  gov- 
ernment had  given  notice  to  the  other  of  its  wish  to  termin- 
ate the  same.  The  President  of  the  United  States,  upon 
the  direction  of  Congress,  gave  such  notice  in  1865,  and  the 
treaty  was  terminated  in  1866.  No  provision  was  made  in 
this  treaty  fixing  the  duty  on  dutiable  articles,  but  it  pro- 
vided for  the  free  admission  from  either  country  to  the  other 
of  a  long  list  of  natural  products,  being  the  growrth  and 
products  of  Canada  and  of  the  United  States,  embracing 
most  of  the  products  of  the  farm,  the  forest,  the  quarry, 
and  the  waters  of  each  country. 

In  the  light  of  present  conditions,  it  is  difficult  to  under- 
stand why  the  United  States  Congress  terminated  this 
treaty.  The  principal  reason  given  was  that,  with  the  enor- 
mous debt  left  by  the  Civil  War,  the  United  States  was  in 
need  of  all  possible  revenues,  and  must  have  the  revenue 
that  would  come  from  the  duty  on  Canadian  imports.  It  is 
possible,  also,  that  a  feeling  of  bitter  hostility,  growing  out 
of  the  attitude  of  Great  Britain  and  certain  factions  in  Can- 
ada during  our  great  civil  conflict,  had  its  influence  upon 
Congress;  but  more  than  all  this,  it  is  probable  that  the  great 
pressing  problems  with  which  the  statesmen  of  that  day 


RECIPROCITY  175 

had  to  deal  were  so  all-absorbing  that  the  possible  growth 
and  development  of  our  commerce  did  not  receive  due  con- 
sideration. 

Its  Practical  Effects 

Figures  which  state  the  imports  and  exports  do  not  al- 
ways tell  the  full  story  of  the  value  of  a  commerce. ^In  any 
reciprocity  arrangement  that  may  be  effected  with  Canada 
both  nations  would  be  benefitted,  not  only  by  their  increased 
sales,  but  by  their  increased  purchases  from  the  other.  But, 
viewed  entirely  from  the  standpoint  of  the  figures  which 
state  the  exports  and  imports,  an  examination  of  these  fig- 
ures for  the  years  preceding,  during,  and  succeeding  the 
period  of  the  treaty  will  disclose  the  fact  that  both  coun- 
tries were  benefitted  bjr  its  operation.  Prior  to  1854  there 
was  comparatively  little  trade  between  Canada  and  the 
United  States,  and  prior  to  1846  scarcely  any;  but  during 
this  time,  while  the  trade  was  insignificantly  small,  our  ex- 
ports always  exceeded  our  imports.  With  the  ratification 
of  the  treaty,  in  1854,  the  trade  between  the  countries  in- 
creased at  a  bound.  Our  exports  grew  from  $12,432,507  in 
1853,  the  year  preceding  the  ratification  of  the  treaty,  to 
$34,362,188  in  1855,  the  first  year  in  which  the  treaty  was 
in  force,  and  our  imports  during  the  same  period  from 
$6,527,559  to  $15,118,289.  This  rapid  increase  continued, 
preserving  almost  the  same  ratio,  during  the  first  few  years 
the  treaty  was  in  operation.  During  our  Civil  war  the  ex- 
ports and  imports  grew  nearer  together,  owing  to  the  cur- 
tailing of  our  production  and  the  increase  of  our  consump- 
tion, until,  in  1864,  the  imports  exceeded  the  exports,  and 
so  again  in  1865  and  in  1866.  The  treaty  terminated  in  1866, 
and  the  excess  of  imports  over  exports,  which  began  in  1864, 
continued  until  1874,  or  for  a  period  of  seven  years  after 
the  termination  of  the  treaty. 

The  Present   Volume  of  Commerce 

The  years  when  this  treaty  was  in  force  were  far  more 
prosperous  for  the  commerce  between  Canada  and  the 
United  States  than  had  hitherto  been  enjoyed.  In  fact,  it 


176  SELECTED  ARTICLES 

was  the  very  beginning  of  what  ha's  since  developed  into  an 
enormous  commerce  between  these  two  neighboring  peo- 
ples. During  the  period  of  a  little  less  than  twelve  years 
that  the  treaty  was  in  force  the  balance  of  trade  in  our 
favor  was  $37,4/9,531,  being  more  than  double  the  entire 
trade  between  the  countries  during  any  year  prior  to  the 
ratification  of  the  treaty,  and  the  total  commerce  grew 
during  that  period  from  $18,000,000  per  annum  to  $76,000,000. 
As  these  countries  have  prospered  and  increased  in  impor- 
tance the  commerce  between  them  has  continued  to  grow 
until,  in  the  fiscal  year  just  ended,  the  total  commerce 
reached  almost  to  $180,000,000,  the  balance  of  trade  being 
greatly  in  our  favor.  The  present  condition  cannot,  how- 
ever, long  continue.  Our  average  tariff  on  dutiable  goods 
coming  from  Canada  to  the  United  States  is  49.83  per  cent., 
and  the  Canadian  average  tariff  on  dutiable  goods  going 
from  the  United  States  into  Canada  is  24.83  per  cent.  Un- 
less commercial  reciprocity  is  soon  attained,  Canadian 
tariffs  will  undoubtedly  be  raised  to  approximately  the  level 
of  our  own,  which  will  practically  destroy  commerce  be- 
tween the  countries. 

The  Proposed  "Brown  Draft"  Treaty 

In  1874,  a  treaty  was  negotiated  between  the  United 
States  and  the  Dominion  government  which  is  known  in 
Canada  as  the  Brown  Draft  Treaty.  This  treaty  contained 
three  schedules,  and  by  its  terms  it  was  agreed  that  the 
duty  on  articles  named  in  these  schedules,  being  the  growth, 
products,  and  manufacture  of  the  Dominion  of  Canada  and 
of  the  United  States,  on  their  importation  from  one  coun- 
try to  the  other,  should,  from  the  first  day  of  July,  1875,  to 
the  thirtieth  day  of  June,  1876,  inclusive,  be  two-thirds  of 
the  rate  paid  at  the  date  of  the  treaty,  and,  from  the  first 
day  of  July,  1876,  to  the  thirtieth  day  of  June,  1877,  inclu- 
sive, be  one-third  of  such  rate,  and  on  and  after  the  first 
day  of  July,  1877,  for  a  period  of  twenty-one  years,  all  such 
articles  should  be  admitted  free  of  duty  into  each  country 
respectively.  Schedule  "A"  of  this  treaty  contained  a  long 


RECIPROCITY  177 

list  of  natural  products,  embracing  almost  every  article 
produced  in  either  country  that  could  be  so  classed.  Sched- 
ule "B"  was  of  farm  machinery,  and  contained  forty  sepa- 
rate articles,  while  Schedule  "C"  contained  a  long  list  of 
other  manufactured  articles  embracing  most  of  the  com- 
modities consumed  by  people  of  this  latitude.  This  treaty 
failed  of  ratification  in  the  United  States  Senate,  and  hence 
was  never  passed  upon  by  the  Canadian  Parliament. 

Recent  Negotiations 

The  Joint  High  Commission,  of  which  Sir  Wilfrid  Laur- 
icr  is  the  Canadian  chairman,  and  Senator  Fairbanks,  of  In- 
diana, the  American  chairman,  and  which  is  still  in  exist- 
ence, wa:s  created  in  1898.  It  met  first  at  Quebec  in  the 
summer  of  1899,  and  again  at  Washington  in  November  of 
the  same  year,  where  it  was  in  session  until  the  following 
1-Vbruary,  and  while  much  progress  was  made  in  consider- 
ing a  commercial  treaty,  no  definite  result  was  attained. 
The  commission  being  unable  to  agree  upon  the  Alaskan 
boundary  dispute,  which  was  also  before  it,  the  commis- 
sioners from  both  sides  were  unwilling  to  proceed  with  the 
consideration  of  a  commercial  treaty.  This  troublesome 
question  being  now  removed  by  the  creation  of  a  special 
tribunal,  to  which  it  has  been  referred,  negotiations  for  the 
reconvening  of  the  Joint  High  Commission  have  been  for 
some  time  in  progress. 

/Any  reciprocity  arrangement  between  these  countries 
must  be  negotiated  and  put  into  effect  by  the  Republican 
party  in  the  United  States  and  the  Liberal  party  in  Canada, — 
at  least  such  must  be  the  case  unless  the  opposing  parties 
reverse  their  more  recent  policy;  and  while  these  parties 
are  so  thoroughly  intrenched  in  power  in  their  respective 
countries  would  seem  a  desirable  time  to  renew  negotia- 
tions. In  any  reciprocity  agreement  that  could  be  made 
some  small  interests  on  both  sides  of  the  line  would  have  to 
suffer.  But  such  interests  are  prospering  to-day  at  enor- 
mous cost  to  far  greater  interests  and  to  the  masses  of  the 
people  of  both  countries,  and  the  time  must  surely  come 


i/8  SELECTED  ARTICLES 

when  unnatural  barriers  will  not  be  maintained  at  such  a 
tremendous  sacrifice  of  the  well-being  of  the  people  for  the 
trifling  advantage  a  very  few  may  receive. 


NEGATIVE  DISCUSSION 

American  Economist.  44:  go.  August  20,  1909. 

Silly   Season   At  Washington. 

It  is  surprising  that  any  person  of  prominence  in  gov- 
ernment employ  at  Washington  should  prepare,  and  still 
more  surprising  that  the  Associated  Press  should  carry,  a 
thousand  words  or  more  of  such  ignorant  and  absurd 
twaddle  as  that  attributed  to  "a  well  known  official"  in  a 
Washington  dispatch  of  August  15,  on  the  subject  of  the 
"distinct  advantage  that  has  been  gained  by  the-  United 
States  under  the  reciprocity  agreements  with  European 
countries  under  the  Dingley  Tariff  law."  This  well-known 
official  not  only  betrays  a  discreditable  lack  of  knowledge  of 
the  wide  difference  between  trade  agreements  and  reci- 
procity agreements,  but  also  contradicts  himself  most  stupid- 
ly in  first  praising  the  workings  of  these  agreements  as  im- 
mensely -beneficial  to  our  foreign  trade,  and  then  commend- 
ing the  new  maximum  tariff  provision  which  cancels  all  of 
the  "beneficial"  agreements!  The  first  part  of  the  article 
implies  a  criticism  and  condemnation  of  the  action  of  Con- 
gress which  that  body  should  take  cognizance  of  by  ascer- 
taining the  identity  and  demanding  the  removal  of  that 
"well  known  official";  while  the  second  and  concluding  part 
is  a  clumsy  and  contradictory  attempt  to  smooth  things 
over. 

All  but  three  of  the  New  York  papers  put  the  article  in 
the  waste  basket.  The  "Tribune",  "Press",  and  "Journal  of 
Commerce"  gave  it  space  which  had  been  better  filled  with 
"bird  stories".  According  to  this  "well-known  official'': 

Generally  speaking,  these  agreements  have  inured  to  our  bene- 
fit and  have  been  very  helpful  in  the  extension  of  our  foreign 
commerce.  They  primarily  have  secured  the  United  States  pro- 


i8o  SELECTED  ARTICLES 

tection  against  adverse   tariff  changes   by  guaranteeing  us  a  con- 
tinuation of   the  favored  nation  treatment. 

A  little  later,  speaking  of  the  legislature  which  abro- 
gates these  "helpful"  agreements,  he  stumbles  over  himself 
by  saying: 

The  application  of  the  maximum  and  minimum  schedules 
provided  for  in  the  Payne-Aldrich  bill  is  going  to  work  out  satis- 
factorily, according  to  the  governmental  tariff  experts,  who  see  no 
reason  to  anticipate  any  break  in  commercial  relations  with  for- 
eign countries  as  a  result  of  their  operation.  The  double  schedule, 
in  their  opinion,  will  go  far  to  sweep  away  all  discriminations, 
and  it  will  be  suicidal,  they  say,  for  any  country  to  stay  outside 
the  pale,  endeavor  to  work  independently  and  attempt  a  tariff 
war.  That  this  feeling  is  apparent  in  France,  whose  manufac- 
turers strongly  opposed  some  of  the  new  schedules,  is  already 
evident  from  the  discussions  in  the  newspapers. 

The  agreements  prevented  tariff  discriminations,  and 
their  abrogation  makes  discrimination  "suicidal".  Now  as 
to  the  "benefits"  of  the  undervaluation  privileges  granted 
in  the  agreements: 

Then,  too,  there  has  been  a  gradual  growth  of  our  exports. 
Lower  duties  on  imported  articles  covered  by  the  agreements 
have  resulted  in  increased  importations,  and  the  ships  bringing 
them  have  returned  with  cargoes  from  this  country,  made  up 
of  shipments  given  special  rates. 

Yes,  there  were  lower  duties  and  increased  importations 
under  the  pernicious  agreements.  Was  that  beneficial  to 
American  labor  and  industry?  Compared  with  1908,  the  im- 
ports for  1909  show  an  increase  of  nearly  $120,000,000.  Of 
these  nearly  $44,000,000  were  dutiable  and  displaced  fully 
double  the  quantity  of  articles  of  domestic  production.  Then, 
too,  our  exports  decreased  nearly  $200,000,000  under  these 
"helpful"  agreements,  and  our  favorable  trade  balance  fell 
off  more  than  $315,000,000.  The  "helpfulness"  of  this  enor- 
mous loss  in  a  period  of  depression  must  appeal  strongly  to 
the  "well  known  official." 

There  is,  however,  one  spasm  of  sense  in  this  statement: 
As  to  Cuba,  to  which  a  concession  was  granted  on  sugar  im- 
ports (and  all  other  Cuban  products)  the  United  States  has  been 
a  distinct  loser,  our  revenue  falling  off  $10,000,000  during  the 
last  year.  We  were  morally  bound  to  assist  Cuba,  however, 
the  officials  say,  because  of  the  activity  displayed  in  her  behalf, 
so  that  this  deficit  is  counted  up  to  the  profit  and  loss  account. 

But  even  here  only  a  part  of  the  truth  is  told.  No  men- 
tion is  made  of  the  $50,000,000  which  we  are  sending  to 
Cuba  every  year  over  and  above  our  sales  to  Cuba,  and 


RECIPROCITY  181 

which  is  spent  by  the  Cuban  people  in  the  purchase  of  goods 
from  European  countries.  Nor  does  it  appear  that  the  "well 
known  official"  is  aware  of  the  fact  that  the  more  than 
$10,000,000  a  year  of  revenue  lost  to  the  United  States 
Treasury  by  reason  of  the  concessions  on  imports  from 
Cuba  finds  its  way  almost  entirely  to  the  coffers  of  the 
Sugar  Trust  and  the  Cigar  and  Tobacco  Trusts. 

It  would  seem  that  in  Washington  the  vacation  season 
is  the  silly  season. 

American  Economist.  44:  92.  October  15,  1909. 
"Reciprocity"  with   Cuba. 

Our  Consul-General  at  Havana  reports  progress  in  the 
development  of  Cuban  industries  by  American  capital  at  the 
expense  of  competing  American  industries.  During  the  last 
fiscal  year  there  have  been  imported  into  this  country  from 
Cuba  something  over  250,000  packages  of  vegetables  and 
fruit,  including  24,348  packages  of  oranges  and  grapefruit. 
As  our  own  area  for  producing  these  commodities — except 
a  few  strictly  tropical  fruits — is  ample,  and  as  experience 
has  shown  the  regular  Dingley  tariff  to  be  no  higher  than 
necessary  to  conserve  the  American  market  for  American 
farmers,  the  20  per  cent,  reduction  under  which  these  farm 
products  enter  this  country  is  an  actual  bounty  to  that 
amount  in  aid  of  foreigners,  in  their  competition  with  our 
own  people.  We  should-  not  have  said  "foreigners".  The 
Consul-General  reports  that  these  imports  "represent  ten 
years  of  American  endeavor"  in  the  exploitation  of  Cuba — 
that  is  to  say,  the  endeavor  of  expatriated  American  capi- 
tal. The  United  States  government,  in  effect,  proposes  to 
any  American  who  will  invest  money  in  Cuba  a  bounty  of 
20  per  cent,  of  the  regular  duty  to  make  it  more  profitable 
for  him  to  invest  his  money  in  Cuba  than  to  invest  it  in  this 
country. 

There  could  hardly  be  worse  statesmanship.  Happily  we 
are  not  likely  to  get  any  more  such  treaties,  but  that  with 


182  SELECTED  ARTICLES 

Cuba  still  persists  and  is  likely  to  persist  until  the  people 
of  that  part  of  the  United  States  which  lies  a  little  back 
from  the  Atlantic  coast  fully  understands  what  is  done  to 
them  in  the  interest  of  American  speculators.  Then  it  will 
be  ended.  At  one  time  the  sentiment  suggested  by  the  en- 
gaging term  "reciprocity"  had  a  strong  hold  on  the  Ameri- 
can people  and  was  worked  for  all  it  was  worth  in  the  in- 
terest of  shrewd  American  capitalists.  In  the  case  of 
Hawaii  it  built  up  some  great  American  sugar  fortunes  and 
annexation  followed.  And  expatriated  capital  expects  to  ac- 
complish the  same  result  in  the  case  of  Cuba. — San  Fran- 
cisco "Chronicle". 


American  Economist.  45:  206.  May  6,  1910. 

Experiences  in  "Reciprocity". 
(Correspondence  American   Economist) 

Washington,  D.  C.,  April  28,  1910. — Early  negotiations 
for  reciprocity  treaties  is  one  of  the  things  contemplated  by 
President  Taft.  He  agreed  with  the  Canadian  authorities  to 
take  up  that  question,  and  already  some  work  has  been 
done  on  the  subject.  The  President  believes  that  a  reci- 
procity treaty  can  be  negotiated  with  great  advantage  to 
both  this  country  and  to  Canada,  and  takes  a  similar  view 
with  regard  to  such  treaties  with  Germany,  France,  and 
other  countries.  President  Roosevelt,  when  he  first  occu- 
pied the  White  House  held  similar  views,  and  probably 
does  yet.  But  there  has  never  been  substantial  backing  in 
Congress  in  favor  of  this  sort  of  tariff  dickering.  The  lead- 
ers in  both  houses  look  with  suspicion  upon  them,  and  for 
that  reason  it  has  been  difficult  to  get  agreements  of  that 
kind  ratified. 

President  McKinley  appointed  Mr.  Kasson  of  "Iowa  to 
negotiate  such  treaties  and  he  spent  a  good  deal  of  time 
and  money  in  getting  up  a  bad  set  of  dickers  with  France 
and  other  nations.  They  were  considered  by  a  Senate  com- 
mittee and  discussed  to  some  extent  in  executive  session, 


RECIPROCITY  183 

but  there  was  very  emphatic  opposition  to  them,  and  so, 
with  the  consent  of  President  McKinley  they  were  never 
pressed.  Mr.  Aldrich  and  other  Republican  senators  regard- 
ed those  Kasson  treaties  as  preposterous.  They  could 
hardly  believe  that  President  McKinley  really  favored  them, 
or  that  he  was  even  familiar  with  what  Mr.  Kasson  had 
done  in  that  direction;  and  there  was  never  any  evidence 
that  President  McKinley  took  any  particular  interest  in 
them.  He  made  no  recommendations  to  the  Senate  on  the 
subject,  but  simply  sent  the  treaties  for  consideration. 

The  public  has  been  led  to  believe  that  great  results  in 
the  way  of  increased  trade  were  accomplished  by  the  reci- 
procity treaties  formerly  in  force,  and  probably  a  large  pro- 
portion of  the  people  now  believe  that  this  country  lost 
when  it  abrogated  the  treaty  with  Canada  and  would  profit 
if  another  one  were  negotiated  and  carried  into  effect.  A 
treaty  confined  to  natural  products  would  not  be  favorable 
now,  and  there  is  hardly  a  remote  possibility,  if  the  Repub- 
lican leaders  in  the  Senate  are  authority  on  the  subject,  of 
the  ratification  of  such  a  treaty.  It  would  also  have  to 
meet  the  approval  of  the  House  because  of  its  charge  of 
the  tariff  law. 

The   One-Sided   Canadian    Treaty 

As  an  illustration  of  the  effect  of  the  reciprocity  treaty 
with  Canada,  which  existed  from  1855  to  1866,  the  exports 
and  imports  during  that  time  may  be  quoted.  That  treaty 
provided  for  the  free  admission  into  either  country  from 
the  other  of  breadstuffs,  provisions,  live  animals,  fruits,  fish, 
poultry,  hides  and  skins,  furs,  stone,  ores  and  metals,  timber 
and  lumber,  unmanufactured  cotton,  flax  and  hemp,  and 
unmanufactured  tobacco — the  list  of  articles  being  identical 
for  each  country.  The  treaty  went  into  effect  on  March 
16,  1855,  and  ended  on  March  17,  1866.'  For  the  fiscal  year 
ending  June  30,  1855,  the  United  States  exported  to  Canada 
$27,741,808  in  value  of  goods  and  imported  from  that  coun- 
try $15,118,289.  The  next  year  the  exports  increased  to  the 
extent  of  $1,283,541  and  the  imports  from  Canada  increased 


i84  SELECTED  ARTICLES 

$822,302.  The  imports  and  exports  fluctuated  during  the 
war  period,  the  imports  being  larger  in  1860  than  the  ex-- 
ports, and  both  being  about  the  same  in  1861,  while  in  1862 
and  1863  the  exports  were  the  largest,  but  in  1864  the  im- 
ports from  Canada  were  over  $3,000,000  greater  than  the  ex- 
ports to  that  country,  and  in  1865  the  imports  were  about 
$5,000,000  greater  than  the  exports.  In  1866  they  were 
$24,000,000  greater,  which  was  the  year  the  treaty  was  abro- 
gated. But  the  Canadians  had  got  their  trade  so  well  es- 
tablished on  this  side  that  their  exports  to  this  country 
largely  exceeded  our  exports  to  Canada  for  the  next  seven 
years. 

Reciprocity  Results  with  Other  Nations 

The  reciprocity  situation  with  other  nations  does  not 
differ  materially  with  that  of  Canada.  Before  the  Hawaiian 
Islands  were  annexed  to  the  United  States  we  had  a  reci- 
procity treaty  with  that  country,  lasting  from  1876  until 
the  time  the  country  became  a  part  of  the  United  States. 
During  all  that  time  the  imports  from  those  islands  were 
two  and  three  times  as  great  as  the  exports  to  those  islands. 
In  1880  the  imports  were  more  than  double  the  exports 
from  the  United  States,  and  in  1890  the  imports  were  three 
times  as  much  as  the  exports,  and  they  were  the  same  in 
1898.  So  that  as  far  as  trade  purposes  were  concerned  it 
was  a  very  one-sided  arrangement,  to  the  disadvantage  of 
this  country. 

Central  American  Treaties 

There  was  a  reciprocity  agreement  with  Guatemala  last- 
ing from  May  30,  1892,  to  August  27,  1894,  when  the  Demo- 
crats annulled  it.  The  exports  from  the  United  States  in 
1891,  the  year  before  the  treaty  took  effect,  were  larger 
than  at  any  time  while  it  was  in  effect,  but  the  exports  were 
always  less  than  the  imports. 

The  agreement  with  Honduras,  which  went  into  effect 
in  1892,  was  similar  in  its  results.  The  imports  the  last 
year  of  the  treaty  were  in  value  $765,138,  while  the  exports 
to  Honduras  were  $558,511. 


RECIPROCITY  185 

With  Nicaragua  there  was  a  somewhat  similar  experi- 
ence. The  year  before  the  agreement  took  effect  the  im- 
ports from  Nicaragua  and  the  exports  to  that  country  were 
larger  than  they  were  any  year  the  treaty  was  in  existence. 
The  exports  were  $1,692,942  in  1891,  but  in  1893,  the  year 
after  the  arrangement  took  effect,  they  were  only  $937,859, 
and  they  were  still  less  the  next  year,  though  the  imports 
from  Nicaragua  were  $1,400,236  in  1893  and  $1,564,472  in 
1894,  the  last  year  of  the  treaty. 

The  exports  to  Salvador  declined  every  year  the  ar- 
rangement was  in  effect,  but  the  imports  were  the  largest 
the  last  year,  being  $1,391,611  greater  in  that  year  than  they 
were  in  1891,  the  year  before  the  treaty  took  effect.  The 
exports  from  the  United  States  were  $88,765  less  the  last 
year  of  the  arrangement  than  the  year  before  it  took  effect. 

Under  the  treaty  with  the  British  West  Indies  the  ex- 
ports from  the  United  States  to  those  countries  the  year 
before  the  arrangement  took  effect  were  in  value  $9,709,138, 
and  they  had  declined  in  1893  under  the  treaty  to  $8,044,846, 
and  were  the  last  year  of  the  treaty  $8,512,016,  but  the  im- 
ports, which  were  $12,440,132  the  first  year  of  the  arrange- 
ment exceeded  $16,000,000  the  second  year  and  were  $13,- 
017,178  the  last  year. 

The  arrangement  with  Santo  Domingo  showed  up  to  a 
little  better  extent,  the  exports  amounting  to  $1,143,479  the 
first  full  year  of  the  treaty  and  to  $1,768,602  the  last  year, 
but  the  imports,  which  were  $2,293,748  the  first  year,  in- 
creased to  $3,200,852  the  last  year. 

In  all  those  cases  the  countries  with  which  the  arrange- 
ments were  made  derived  the  most  advantage  from  them. 
So  far  as  trade  is  concerned  the  United  States  obtained  no 
apparent  advantage  whatever,  when  the  exports  from  this 
country  were  taken  into  consideration. 

Big  Sums  Paid  to  Cuba  for  "Reciprocity" 

Cuba  has  been  pointed  to  as  one  country  from  which 
valuable  results  were  obtained  under  a  reciprocity  treaty. 
Hut  the  figures  do  not  bear  out  that  statement.  The  first 


i86  SELECTED  ARTICLES 

reciprocity  agreement  with  Cuba  was  negotiated  with  Spain, 
and  went  into  effect  September,  1891.  For  the  fiscal  year 
1892  the  imports  from  Cuba  increased  $6,000,000  over  the 
previous  year,  and  the  exports  to  Cuba  increased  something 
over  $5,000,000.  The  next  year  the  imports  increased  less 
than  $1,000,000,  while  the  exports  increased  a  little  over 
$6,000,000.  The  last  year  of  the  treaty  the  imports  declined 
$3,000,000  and  the  exports  $4,000,000,  the  total  imports  from 
Cuba  reaching  $75,678,261  and  the  exports  to  Cuba  $20,125,- 
321.  There  was  certainly  nothing  in  those  figures  to  make 
out  anything  like  real  reciprocity  with  Cuba. 

The  second  treaty  with  Cuba  was  negotiated  when  it 
became  an  independent  nation  and  took  effect  December  27, 
1903.  Under  that  agreement  Cuba  received  a  20  per  cent, 
reduction  from  the  Dingley  rates  of  duty.  The  chief  imports 
from  Cuba  are  sugar  and  tobacco.  The  imports  from  Cuba 
in  1902  aggregated  $34,694,684,  and  had  exceeded  that  fig- 
ure only  once  (in  1901)  in  six  years. 

The  imports  in  the  fiscal  year  1903  were  $52,942,790. 
The  treaty  took  effect  in  December  of  that  year,  and  the  im- 
ports from  Cuba  for  each  fiscal  year  since,  with  the  exports 
to  Cuba,  and  the  amount  of  duty  which  the  United  States 
has  lost  owing  to  the  treaty,  are  as  follows: 

Reduction  of  duty 

Imports  Exports  in  favor  of 

Year  from  Cuba  to  Cuba  Cuba 

1904     $76,983,418  $25,810,812  $8,000,000 

1905     86,304,259  36,407,932  8,954,696 

19 '6     84,979,821  46,377,277  10,982,170 

1907 97,441,690  48,330,913  13,161,898 

1908     85,284,692  46,500,800  10,537,921 

1909     96,722,193  42,629,871  13,000,000 

1910     *99, 000,000  *50,215,769  

*Partly  determined 

Not  yet  determined 

Under  the  treaty  exports  have  nearly  doubled  while  im- 
ports from  Cuba  have  practically  trebled,  as  the  effect  of 
the  treaty,  as  they  were  running  previous  to  1903  at  about 
$34,000,000,  whereas  they  have  now  reached  nearly  $100,000,- 
ooo.  At  the  same  time  the  consumer  in  this  country  has  got 
sugar  no  cheaper  and  has  paid  enormous  sums  annually, 


RECIPROCITY  187 

probably  reaching  $14,000,000  for  the  present  fiscal  year,  as 
a  present  to  Cuba.  The  United  Kingdom  and  several  other 
countries  have  increased  their  exports  of  manufactures  to 
Cuba  relatively  greater  than  the  United  States,  while  this 
treaty  has  been  in  effect. 

Other  Unprofitable   Treaties 

Under  the  treaty  with  Porto  Rico  imports  increased  and 
exports  decreased.  With  Brazil  there  was  a  similar  result. 
The  first  year  of  the  arrangement  imports  from  that  country 
increased  $35,000,000,  reaching  $118,633,604,  while  the  exports 
to  Brazil  increased  to  the  extent  of  $71,627  only,  the  total 
reaching  $14,291,873.  In  the  next  year  the  exports  to  Bra- 
zil were  $825,000  less  than  they  were  the  first  year.  The  ex- 
ports to  Brazil  were  greater  the  two  years  following  the 
annulment  of  the  agreement  than  while  it  was  in  effect. 

The  first  year  of  the  agreement  with  Austria-Hungary 
imports  increased  $2,300,000,  while  exports  to  that  country 
declined  $1,000,000,  the  total  of  the  exports  being  $571,037, 
and  the  total  of  the  imports  being  $10,054,501. 

The  first  year  of  the  treaty  with  Germany  showed  an 
increase  in  imports  from  that  country  of  $14,000,000  and  a 
decrease  in  exports  to  that  country  of  $22,000,000. 

No  Benefit  in  the  Figures 

It  is  not  necessary  to  give  any  more  statistics  to  show 
that  the  falsity  of  the  statements  that  this  country  was 
greatly  benefited,  in  a  trade  sense,  by  reciprocity  treaties. 
The  very  opposite  is  the  fact,  as  shown  by  the  statistics  of 
our  government.  That  is  why  Mr.  Aldrich  and  the  other 
Republican  leaders  in  the  Senate  as  well  as  in  the  House 
were  not  in  favor  of  extending  trade  in  that  way.  Canada 
has  been  the  most  obstinate  of  any  nation  we  have  had 
negotiations  with  on  this  subject.  She  is  aided  to  a  large 
extent  in  the  United  States  by  the  ignorance  of  newspaper 
writers  on  this  topic.  But  Congressmen  when  they  under- 
take to  ratify  treaties  study  the  question  and  investigate 
the  facts,  and  that  is  the  reason  the  Kasson  treaties  were 


i88  SELECTED  ARTICLES 

pigeon-holed,  as  will  be  similar  treaties  in  the  future,  pro- 
viding any  such  are  sent  to  Congress.  The  surprise  of 
some  members  of  Congress  over  Senator  Root's  declaration 
in  favor  of  a  treaty  with  Canada  confined  to  natural  prod- 
ucts seems  to  be  fully  justified  by  the  circumstances. 

American  Economist.  47:  20.  January  13,  1911. 
Chasing  the    Reciprocity   Rainbow. 

The  attitude  of  the  farmers  of  the  Canadian  Northwest 
regarding  protection  and  free-trade  is  not  altogether  un- 
like the  attitude  of  certain  people  in  New  England.  The 
Canadian  farmers  are  fierce  for  free-trade  in  farm  products. 
They  have  a  big  surplus  to  dispose  of,  and  if  they  are  al- 
lowed to  put  their  stuff  over  the  border  without  paying 
any  tariff  they  are  perfectly  willing  that  the  industries  of 
Eastern  Canada  should  be  sacrificed  on  the  altar  of  free- 
trade.  Also  the  reciprocity  shouters  of  New  England  want 
free-trade  in  Canada's  farm  products,  so  that  they  may  get 
their  food-stuffs  cheaper,  and  if  they  can  have  this  privilege 
they  are  perfectly  willing  to  sacrifice  the  American  farm- 
ers of  the  food  producing  sections  of  the  Middle  West  on 
the  altar  of  free-trade.  But  there  is  a  difference.  The  Ca- 
nadian farmers  are  free-traders  and  don't  hesitate  to  say  so; 
while  the  New  England  reciprocity  shouters  claim  to  be 
protectionists.  The  Canadian  farmers  are  honest  and  con- 
sistent; the  New  Englanders  are  not. 

But  neither  the  Canadian  farmers  nor  the  New  Eng- 
land near-free-traders  are  likely  to  get  what  they  want. 
American  farmers  are  so  big  an  element  in  American  poli- 
tics that  no  political  party  can  afford  to  trade  off  their 
rights  and  interests  in  a  reciprocity  dicker  which  would  let 
in  Canada's  competing  farm  products  free  of  duty.  Neither 
the  Republican  nor  the  Democratic  party  would  dare  to  do 
such  a  thing.  On  the  other  hand,  the  industrialists  of 
Eastern  Canada  are  so  strong  in  the  large  centers  of  popu- 
lation that  no  Canadian  government  will  take  the  risk  of 


RECIPROCITY  189 

trading  oft  their  rights  and  interests  in  a  reciprocity  dicker 
which  would  let  in  American  manufactures  at  low  duties  or 
no  duties.  This  situation  is  so  perfectly  obvious  that  Presi- 
dent Taft  ought  to  see  it  clearly.  Yet  the  dream  of  reci- 
procity with  Canada  continues  to  be  dreamed  at  Washing- 
ton. In  a  dispatch  to  the  New  York  Tribune  from  Wash- 
ington, December  22,  we  read: 

In  preparation  for  negotiations  on  Canadian  reciprocity  Presi- 
dent Taft  held  an  extended  conference  with  Secretary  Knox  and 
Chandler  Anderson,  counselor  of  the  State  Department,  who  was 
recently  appointed  to  the  place  made  vacant  by  the  death  of 
Henry  M.  Hoyt. 

The  prospects  for  a  successful  issue  of  the  negotiations  are 
brighter  at  present  than  they  have  been  at  any  other  time  since 
the  subject  was  brought  up  in  connection  with  the  tariff  agree- 
ment by  which  Canada  obtained  the  minimum  rates  under  the 
Payne-Aldrich  law.  So  far  no  serious  obstacles  have  arisen. 
President  Taft's  efforts  to  pave  the  way  for  the  negotiations  have 
been  unusually  successful  and  there  has  been  much  evidence  of 
a  responsive  feeling  in  Canada. 

The  negotiations  will  be  taken  up  directly  with  the  Cana- 
dian representatives  early  in  January  in  Washington.  Mr.  An- 
derson has  been  giving  most  of  his  time  to  the  question  and 
carrying  on  the  investigations  interrupted  by  the  death  of  Mr. 
Hnyt.  The  conference  to-day  was  for  the  purpose  of  gathering 
up  the  loose  ends  and  mapping  out  the  field  to  be  covered  by  the 
agreement. 

Reciprocity  has  been  well  defined  as  "a  sharp  bargain 
between  sharp  bargainers,  one  or  the  other  of  whom  is  cer- 
tain to  get  the  best  of  the  bargain."  Another  good  defini- 
tion would  be:  "Reciprocity  is  a  dishonest  scheme  con- 
trived by  selfish  men  whereby  one  producing  interest  is 
sacrificed  for  the  benefit  of  some  other  producing  interest." 
In  practical  operation  as  between  the  United  States  and 
Canada,  reciprocity  fits  both  of  these  definitions.  Both 
parties  are  trying  to  drive  a  sharp  bargain.  Canada  is  fig- 
uring how  she  can  help  her  farmers  at  the  expense  of  Amer- 
ican farmers  and  without  paralyzing  Canadian  industries, 
and  the  United  States  is  figuring  how  to  help  American 
manufacturers  without  hurting  American  farmers.  The 
sharp  bargainers  on  both  sides  are  going  to  fall  down.  The 
things  they  are  trying  to  do  can  not  be  done  without  in- 
volving unpleasant  political  consequences  to  both  bargain- 
ers. President  Taft  is  chasing  a  reciprocity  rainbow. 


igo  SELECTED  ARTICLES 

American  Economist.  47:   62-6.   February  3,   1911. 

Canadian  Agreement. 

Following  is  the  official  draft  of  President  Taft's  mes- 
sage of  January  26,  1911,  to  the  Congress  of  the  United 
States,  announcing  the  terms  of  the  proposed  "reciprocity" 
agreement  with  Canada,  together  with  tabulated  statements 
showing  the  new  rates  of  duty: 

Special  Message 

To  THE  SENATE  AND  HOUSE  OF  REPRESENTATIVES: 

In  my  annual  message  of  December  6,  1910,  I  stated  that 
the  policy  of  broader  and  closer  trade  relations  with  the 
Dominion  of  Canada,  which  was  initiated  in  the  adjustment 
of  the  maximum  and  minimum  provisions  of  the  Tariff  act 
of  August  5,  1909,  had  proved  mutually  beneficial  and  that  it 
justified  further  efforts  for  the  readjustment  of  the  commer- 
cial'relations  of  the  two  countries.  I  also  informed  you 
that,  by  my  direction,  the  Secretary  of  State  had  dispatched 
two  representatives  of  the  Department  of  State  as  special 
commissioners  to  Ottawa  to  confer  with  representatives  of 
the  Dominion  government,  that  they  were  authorized  to 
take  steps  to  formulate  a  reciprocal  trade  agreement,  and 
that  the  Ottawa  conferences  thus  begun,  had  been  ad- 
journed to  be  resumed  in  Washington. 

On  the  7th  of  the  present  month  two  cabinet  ministers 
came  to  Washington  as  representatives  of  the  Dominion 
government,  and  the  conferences  were  continued  between 
them  and  the  Secretary  of  State.  The  result  of  the  nego- 
tiations was  that  on  the  21st  instant  a  reciprocal  trade  agree- 
ment was  reached,  the  text  of  which  is  herewith  transmitted 
with  accompanying  correspondence  and  other  data. 

CONTROVERSIES  THAT  HAVE  BEEN  ELIMINATED 

One  by  one  the  controversies  resulting  from  the  uncer- 
tainties which  attended  the  partition  of  British  territory  on 
the  American  continent  at  the  close  of  the  Revolution,  and 


RECIPROCITY  191 

which  were  inevitable  under  the  then  conditions,  have  been 
eliminated — some  by  arbitration  and  some  by  direct  nego- 
tiation. The  merits  of  these  disputes,  many  of  them  ex- 
tending through  a  century,  need  not  now  be  reviewed. 
They  related  to  the  settlement  of  boundaries,  the  definition 
of  rights  of  navigation,  the  interpretation  of  treaties,  and 
many  other  subjects. 

Through  the  friendly  sentiments,  the  energetic  efforts, 
and  the  broadly  patriotic  views  of  successive  administrations, 
and  especially  of  that  of  my  immediate  predecessor,  all 
these  questions  have  been  settled.  The  most  acute  related 
to  the  Atlantic  fisheries,  and  this  long-standing  controversy, 
after  amicable  negotiation,  was  referred  to  The  Hague  Tri- 
bunal. The  judgment  of  that  august  international  court  has 
been  accepted  by  the  people  of  both  countries  and  a  satis- 
factory agreement  in  pursuance  of  the  judgment  has  ended 
completely  the  controversy.  An  equitable  arrangement  has 
recently  been  reached  between  our  Interstate  Commerce 
Commission  and  the  similar  body  in  Canada  in  regard  to 
through  rates  on  the  transportation  lines  between  the  two 
countries. 

IDENTITY  OF  INTEREST    OF  Two  PEOPLES 

The  paih  having  been  thus  opened  for  the  improvement 
of  commercial  relations,  a  reciprocal  trade  agreement  is 
the  logical  sequence  of  all  that  has  been  accomplished  in 
disposing  of  matters  of  a  diplomatic  and  controversial  char- 
acter. The  identity  of  interest  of  two  peoples  linked  to- 
gether by  race,  language,  political  institutions,  and  geogra- 
phical proximity  offers  the  foundation  across  the  boundary 
of  the  thrifty  and  invancement  of  our  own  country  by  the 
migration  across  the  boundary  of  the  thrifty  and  industrious 
Canadians  of  English,  Scotch,  and  French  origin  is  now  re- 
paid by  the  movement  of  large  numbers  of  our  own  sturdy 
farmers  to  the  northwest  of  Canada,  thus  giving  their  labor, 
their  means,  and  their  experience  to  the  development  of 
that  section,  with  its  agricultural  possibilities. 

The  guiding  motive  in  seeking  adjustment  of  trade  rela- 


192  SELECTED  ARTICLES 

tions  between  two  countries  so  situated  geographically 
should  be  to  give  play  to  productive  forces  as  far  as  prac- 
ticable, regardless  of  political  boundaries.  While  equivalen- 
cy should  be  sought  in  an  arrangement  of  this  character,  an 
exact  balance  of  financial  gain  is  neither  imperative  nor  at- 
tainable. No  yardstick  can  measure  the  benefits  to  the  two 
peoples  of  this  freer  commercial  intercourse  and  no  trade 
agreement  should  be  judged  wholly  by  custom  house  statis- 
tics. 

THE  NEKIJ  OF  THE  HOUR  is  A  BROAD  AND  STATESMANLIKE  VIEW 

We  have  reached  a  stage  in  our  own  development  that 
calls  for  a  statesmanlike  and  broad  view  of  our  future  eco- 
nomic status  and  its  requirements.  We  have  drawn  upon 
our  natural  resources  in  such  a  way  as  to  invite  attention  to 
their  necessary  limit.  This  has  properly  aroused  effort  to 
conserve  them'  to  avoid  their  waste,  and  to  restrict  their 
use  to  our  necessities.  We  have  so  increased  in  population 
and  in  our  consumption  of  food  products  and  the  other 
necessities  of  life,  hitherto  supplied  largely  from  our  own 
country,  that  unless  we  materially  increase  our  production 
we  can  see  before  us  a  change  in  our  economic  position, 
from  that  of  a  country  selling  to  the  world  food  and  natural 
products  of  the  farm  and  forest,  to  one  consuming  and  im- 
porting them.  Excluding  cotton,  which  is  exceptional,  a 
radical  change  is  already  shown  in  our  exports  in  the  falling 
off  in  the  amount  of  our  agricultural  products  sold  abroad 
and  a  corresponding  marked  increase  in  our  manufactures 
exported.  A  far-sighted  policy  requires  that  if  we  can  en- 
large our  supply  of  natural  resources,  and  especially  of  food 
products  and  the  necessities  of  life,  without  substantial  in- 
jury to  any  of  our  producing  and  manufacturing  classes,  we 
should  take  steps  to  do  so  now.  We  have  on  the  north  of 
us  a  country  contiguous  to  ours  for  three  thousand  miles, 
with  natural. resources  of  the  same  character  as  ours  which 
have  not  been  drawn  upon  as  ours  have  been,  and  in  the  de- 
velopment of  which  the  conditions  as  to  wages  and  charac- 
ter of  the  wage  earner  and  transportation  to  market  differ 


RECIPROCITY  193 

but  little  from  those  prevailing  with  us.  The  difference  is 
not  greater  than  it  is  between  different  states  of  our  own 
country  or  between  different  Provinces  of  the  Dominion  of 
Canada. 

WE  SHOULD  GET  RID  OF  AX  OBSTRUCTIVE  OK  PROHIBITORY  TARIFF 

Ought  we  not,  then,  to  arrange  a  commercial  agreement 
\\ith  Canada,  if  we  can,  by  which  we  shall  have  direct  ac- 
cess to  her  great  supply  of  natural  products  without  an  ob- 
structing or  prohibitory  tariff?  This  is  not  a  violation  of 
the  protective  principle,  as  that  has  been  authoritatively  an- 
nounced by  those  who  uphold  it,  because  that  principle  does 
not  call  for  a  tariff  between  this  country  and  one  whose  con- 
ditions as  to  production,  population,  and  wages  are  so  like 
ours,  and  when  our  common  boundary  line  of  three  thou- 
sand miles  in  itself  must  make  a  radical  distinction  between 
our  commercial  treatment  of  Canada  and  any  other  country. 

The  Dominion  has  greatly  prospered.  It  has  an  active, 
aggressive,  and  intelligent  people.  They  are  coming  to  the 
parting  of  the  ways.  They  must  soon  decide  whether  they 
are  to  regard  themselves  as  isolated  permanently  from  our 
markets  by  a  perpetual  wall  or  whether  we  are  to  be  com- 
mercial friends.  If  we  give  them  reason  to  take  the  former 
view,  can  we  complain  if  they  adopt  methods  denying  ac- 
cess to  certain  of  their  natural  resources  except  upon  con- 
ditions quite  unfavorable  to  us? 

A  notable  instance  of  such  a  possibility  may  be  seen  in 
the  conditions  surrounding  the  supply  of  pulp  wood  and 
the  manufacture  of  print  paper,  for  which  we  have  made  a 
conditional  provision  in  the  agreement,  believed  to  be  equit- 
able. Should  we  not  now,  therefore,  before  their  policy  has 
become  too  crystallized  and  fixed  for  change,  meet  them  in 
a  spirit  of  real  concession,  facilitate  commerce  between  the 
two  countries,  and  thus  greatly  increase  the  natural  resourc- 
es available  to  our  people? 

I  do  not  wish  to  hold  out  the  prospect  that  the  unre- 
stricted interchange  of  food  products  will  greatly  and  at 
once  reduce  their  cost  to  the  people  of  this  country.  More- 


194  SELECTED  ARTICLES 

over,  the  present  small  amount  of  Canadian  surplus  for  ex- 
port as  compared  with  that  of  our  own  production  and  con- 
sumption would  make  the  reduction  gradual.  Excluding  the 
element  of  transportation,  the  price  of  staple  food  products, 
especially  of  cereals,  is  much  the  same  the  world  over,  and 
the  recent  increase  in  price  has  been  the  result  of  a  world- 
wide cause.  But  a  source  of  supply  as  near  as  Canada  would 
certainly  help  to  prevent  speculative  fluctuations,  would  steady 
local  price  movements,  and  would  postpone  the  effect  of  a 
further  world  increase  in  the  price  of  leading  commodities 
entering  into  the  cost  of  living,  if  that  be  inevitable. 

In  the  reciprocal  trade  agreement  numerous  additions  are 
made  to  the  free  list.  These  include  not  only  food  com- 
modities, such  as  cattle,  fish,  wheat,  and  other  grains,  fresh 
vegetables,  fruits,  and  dairy  products,  but  also  rough  lumber 
and  raw  materials  useful  to  our  own  industries.  Free  lum- 
ber we  ought  to  have.  By  giving  our  people  access  to  Ca- 
nadian forests  we  shall  reduce  the  consumption  of  our  own, 
which,  in  the  hands  of  comparatively  few  owners,  now  have 
a  value  that  requires  the  enlargement  of  our  available  tim- 
ber resources. 

"!N    ACCORD   WITH    THE    EXEMPTION    OF   RAW    MATERIAL    FROM 

DUTY" 

Natural,  and  especially  food,  products  being  placed  on 
the  free  list,  the  logical  development  of  a  policy  of  reciproc- 
ity in  rates  on  secondary  food  products,  or  foodstuffs 
partly  manufactured,  is,  where  they  cannot  also  be  entirely 
exempted  from  duty,  to  lower  the  duties  in  accord  with  the 
exemption  of  the  raw  material  from  duty.  This  has  been 
followed  in  the  trade  agreement  which  has  been  negotiated. 
As  an  example,  wheat  is  made  free  and  the  rate  on  flour  is 
equalized  on  a  lower  basis.  In  the  same  way,  live  animals 
being  made  free,  the  duties  on  fresh  meats  are  substantially 
lowered.  Fresh  fruits  and  vegetables  being  placed  on  the 
free  list,  the  duties  on  canned  goods  of  these  classes  are  re- 
duced. 

Both    countries   in   their   industrial   development   have   to 


RECIPROCITY  195 

meet  the  competition  of  lower-priced  labor  in  other  parts  of 
the  world.  Both  follow  the  policy  of  encouraging  the  de- 
velopment of  home  industries  by  protective  duties  within 
reasonable  limits.  This  has  made  it  difficult  to  extend  the 
principle  of  reciprocal  rates  to  many  manufactured  com- 
modities, but  after  much  negotiation  and  effort  we  have  suc- 
ceeded in  doing  so  in  various  and  important  instances. 

BENEFITS  TO  AGRICULTURAL  IMPLEMENT  MAKERS 

The  benefit  to  our  widespread  agricultural  implement  in- 
dustry from  the  reduction  of  Canadian  duties  in  the  agree- 
ment is  clear.  Similarly,  the  new,  widely  distributed  and 
expanding  motor  vehicle  industry  of  the  United  States  is 
given  access  to  the  Dominion  market  on  advantageous  terms. 

My  purpose  in  making  a  reciprocal  trade  agreement  with 
Canada  has  been  not  only  to  obtain  one  which  would  be 
mutually  advantageous  to  both  countries,  but  one  which  also 
would  be  truly  national  in  its  scope  as  applied  to  our  own 
country  and  would  be  of  benefit  to  all  sections.  The  cur- 
rents of  business  and  the  transportation  facilities  that  will 
be  established  forward  and  back  across  the  border  cannot 
but  inure  to  the  benefit  of  the  boundary  states.  Some  read- 
justments may  be  needed,  but  in  a  very  short  period  the 
advantage  of  the  free  commercial  exchange  between  com- 
munities separated  only  by  short  distances  will  strikingly 
manifest  itself.  That  the  broadening  of  the  sources  of  food 
supplies,  that  the  opening  of  the  timber  resources  of  the 
Dominion  to  our  needs,  that  the  addition  to  the  supply  of 
raw  materials,  will  be  limited  to  no  particular  section  does 
not  require  demonstration.  The  same  observation  applies  to 
the  markets  which  the  Dominion  offers  us  in  exchange.  As 
an  illustration,  it  has  been  found  possible  to  obtain  free 
entry  into  Canada  for  fresh  fruits  and  vegetables — a  matter 
of  special  value  to  the  South  and  to  the  Pacific  coast  in  dis- 
posing of  their  products  in  their  season.  It  also  has  been 
practicable  to  obtain  free  entry  for  the  cottonseed  oil  in  the 
South — a  most  important  product  with  a  rapidly  expanding 
consumption  in  the  Dominion. 


196  SELECTED  ARTICLES 

The  entire  foreign  trade  of  Canada  in  the  last  fiscal  year, 
1910,  was  $665,000,000.  The  imports  were  $376,000,000,  and 
of  this  amount  the  United  States  contributed  more  than 
$223,000,000.  The  reduction  in  the  duties  imposed  by  Canada 
will  largely  increase  this  amount  and  give  us  even  a  larger 
share  of  her  market  than  we  now  enjoy,  great  as  that  is. 

CHIEFLY  AFFECTS   COST  OF  LIVING 

The  data  accompanying  the  text  of  the  trade  agreement 
exhibit  in  detail  the  facts  which  are  here  set  ferth  briefly 
and  in  outline  only.  They  furnish  full  information  on  which 
the  legislation  recommended  may  be  based.  Action  on  the 
agreement  submitted  will  not  interfere  with  such  revision  of 
our  own  tariff  on  imports  from  all  countries  as  Congress 
rnay  decide  to  adopt. 

Reciprocity  with  Canada  must  necessarily  be  chiefly  con- 
fined in  its  effect  on  the  cost  of  living  to  food  and  forest 
products.  The  question  of  the  cost  of  clothing  as  affect- 
ed by  duty  on  textiles  and  their  raw  materials,  so  much 
mooted,  is  not  within  the  scope  of  an  agreement  with 
Canada,  because  she  raises  comparatively  few  wool  sheep, 
and  her  textile  manufactures  are  unimportant. 

WILL   CEMENT  FRIENDLY   RELATIONS 

This  trade  agreement,  if  entered  into,  will  cement  the 
friendly  relations  with  the  Dominion  which  have  resulted 
from  the  satisfactory  settlement  of  the  controversies  that 
have  lasted  for  a  century,  and  further  promote  good  feeling 
between  kindred  peoples.  It  will  extend  the  market  for 
numerous  products  of  the  United  States  among  the  inhabi- 
tants of  a  prosperous  neighboring  country  with  an  increas- 
ing population  and  an  increasing  purchasing  power.  It  will 
deepen  and  widen  the  sources  of  food  supply  in  contiguous 
territory,  and  will  facilitate  the  movement  and  distribution 
of  these  foodstuffs. 

The  geographical  proximity,  the  closer  relation  of  blood, 
common  sympathies,  and  identical  moral  and  social  ideas  fur- 


RECIPROCITY  197 

nish  very  real  and  striking  reasons  why  this  agreement  ought 
to  be  viewed  from  a  high  plane. 

FEELS   THAT  HE    HAS    CORRECTLY    INTERPRETED    THE    WISH    OF 
THE   AMERICAN   PEOPLE 

Since  becoming  a  nation,  Canada  has  been  our  good 
neighbor,  immediately  contiguous  across  a  wide  continent 
without  artificial  or  natural  barrier  except  navigable  waters 
used  in  common. 

She  has  cost  us  nothing  in  the  way  of  preparations  for 
defense  against  her  possible  assault,  and  she  never  will. 
She  has  sought  to  agree  with  us  quickly  when  differences 
have  disturbed  our  relations.  She  shares  with  us  common 
traditions  and  aspirations.  I  feel  I  have  correctly  inter- 
preted the  wish  of  the  American  people  by  expressing  in 
the  arrangement  now  submitted  to  Congress  for  its  ap- 
proval, their  desire  for  a  more  intimate  and  cordial  relation- 
ship with  Canada.  I  therefore  earnestly  hope  that  the  meas- 
ure will  be  promptly  enacted  into  law. 

Wm.  II.  Taft. 
The  White  House,  January  26,  1911. 

1'iew  of  Canadian  Negotiators 

How  THE  AGREEMENT  Is  TO  AFFECT  WOOD  PULP  AND  PAPER 
Washington,  January  21,  1911. 

Dear  Mr.  Secretary: —  i.  The  negotiations  initiated  by  the 
President  several  months  ago,  through  your  communication 
to  His  Excellency  the  British  Ambassador,  respecting  a 
reciprocal  tariff  arrangement  between  the  United  States 
and  Canada,  and  since  carried  on  directly  between  represen- 
tatives of  the  governments  of  the  two  countries,  have  now, 
we  are  happy  to  say,  reached  a  stage  which  gives  reasonable 
assurance  of  a  conclusion  satisfactory  to  both  countries. 

2.  We    desire    to    set    forth    what   we    understand    to   be 
the  contemplated  arrangement  and  to  ask  you  to  confirm  it. 

3.  It  is  agreed  that  the  desired  tariff  changes  shall  not 


198  SELECTED  ARTICLES 

take  the  formal  shape  of  a  treaty,  but  that  the'  governments 
of  the  two  countries  will  use  their  utmost  efforts  to  bring 
about  such  changes  by  concurrent  legislation  at  Washing- 
ton and  Ottawa. 

4.  The  governments  of  the  two   countries  having  made 
this  agreement  from  the  conviction  that,  if  confirmed  by  the 
necessary  legislative  authorities,  it  will  benefit  the  people  on 
both  sides  of  the  border  line,  we  may  reasonably  hope  and 
expect   that   the    arrangement,   if   so    confirmed,    will   remain 
in   operation  for  a   considerable  period.     Only  this  expecta- 
tion on  the  part  of  both  governments  would  justify  the  time 
and  labor  that  have  been   employed  in  the  maturing  of  the 
proposed  measures. 

BOTH  GOVERNMENTS  FREE  TO  MAKE  CHANGES  IN  THE  TARIFF 

Nevertheless,  it  is  distinctly  understood  that  we  do  not 
attempt  to  bind  for  the  future  the  action  of  the  United  States 
Congress  or  the  Parliament  of  Canada,  but  that  each  of 
these  authorities  shall  be  absolutely  free  to  make  any  change 
of  tariff  policy  or  of  any  other  matter  covered  by  the  pres- 
ent arrangement  that  may  be  deemed  expedient.  We  look 
for  the  continuance  of  the  arrangement,  not  because  either 
party  is  bound  to  it,  but  because  of  our  conviction  that  the 
more  liberal  trade  policy  thus  to  be  established  will  be 
viewed  by  the  people  of  the  United  States  and  Canada  as 
one  which  will  strengthen  the  friendly  relations  now  hap- 
pily prevailing  and  promote  the  commercial  interests  of 
both  countries. 

5.  As  respects  a  considerable  list  of  articles  produced  in 
both  countries,  we  have  been  able  to  agree  that  they  shall 
be   reciprocally  free.     A  list   of  the   articles   to  be   admitted 
free   of   duty   into   the   United   States   when    imported    from 
Canada,  and   into    Canada  when   imported  from   the   United 
States,  is  set  forth  in  Schedule  A. 

6.  As  respects  another  group  of  articles,  we  have  been 
able  to  agree  upon  common  rates  of  duty  to  be  applied  to 
such    articles   when    imported   into    the    United    States   from 
Canada  or  into  Canada  from  the  United   States.     A  list  of 


RECIPROCITY  199 

these  articles,  with  the  rates  of  duty,  is  set  forth  in  Schedule 
B. 

7.  In  a  few  instances  it  has  been  found  that  the  adoption 
of  a  common  rate  will  be  inconvenient  and  therefore  excep- 
tions have  to  be  made. 

8.  Schedule   C  specifies   articles  upon  which   the   United 
States  will   levy  the   rates  therein   set   forth  when   such   ar- 
ticles are  imported  from  Canada. 

9.  Schedule  D  specifies  articles  upon  which  Canada  will 
levy  the  rates  therein  set  forth  when  such  articles  are  im- 
ported from  the  United  States. 

CAN  Do  NOTHING  IN  THE  EXPORTATION  OF  PULP  WOOD 

10.  With    respects    to    the    discussions    that    have    taken 
place  concerning  the  duties  upon  the  several  grades  of  pulp, 
printing  paper,  etc. — mechanically  ground  wood  pulp,  chemi- 
cal wood  pulp,  bleached  and  unbleached,  news  printing  pa- 
per and   other  printing  paper   and   board  made   from  wood 
pulp,  of  the  value  not  exceeding  four  cents  per  pound  at  the 
place  of  shipment — we  note  that  you  desire  to  provide  that 
'such  articles  from  Canada  shall  be  made  free  of  duty  in  the 
United   States   only   upon   certain   conditions    respecting   the 
shipment  of  pulp  wood  from  Canada.     It  is  necessary   that 
we  should  point  out  that  this  is  a  matter  in  which  we  are 
not  in  a  position  to  make  any  agreement.     The  restrictions 
at  present  existing  in  Canada  are  of  a  Provincial  character. 
They   have  been   adopted  by   several   of  the   Provinces  with 
regard  to  what  are  believed  to  be  Provincial  interests.     We 
have  neither  the   right  nor  the  desire  to   interfere  with  the 
Provincial  authorities  in  the  free  exercise  of  their  constitu- 
tional powers  in  the  administration  of  their  public  lands. 

MUST  BE,   FOR  THE  PRESENT,  INOPERATIVE 

The  provisions  you  are  proposing  to  make  respecting  the 
conditions  upon  which  these  classes  of  pulp  and  paper  may 
be  imported  into  the  United  States  free  of  duty  must  neces- 
sarily be  for  the  present  inoperative.  Whether  the  Provin- 


200         %  SELECTED  ARTICLES 

cial  governments  will  desire  to  in  any  way  modify  their 
regulations  with  a  view  to  securing  the  free  admission  of 
pulp  and  paper  from  their  Provinces  into  the  market  of  the 
United  States,  must  be  a  question  for  the  Provincial  authori- 
ties to  decide.  In  the  meantime,  the  present  duties  on  pulp 
and  paper  imported  from  the  United  States  into  Canada  will 
remain.  Whenever  pulp  and  paper  of  the  classes  already 
mentioned  are  admitted  into  the  United  States  free  of  duty 
from  all  parts  of  Canada,  then  similar  articles,  when  im- 
ported from  the  United  States,  shall  be  admitted  into  Canada 
free  of  duty. 

CUSTOMS   REGULATIONS   NECESSARY 

11.  The  tariff  changes  proposed  might  not  alone  be  suf- 
ficient  to   fully   bring   about   the    more    favorable    conditions 
which    both   parties    desire.     It   is    conceivable   that   customs 
regulations  which  are  deemed  essential*  in  some  cases  might 
operate    unfavorably    upon    the    trade    between    the    United 
States  and  Canada  and  that  such  regulations,  if  made  with- 
out due  regard  to  the  special  conditions  of  the  two  countries, 
might  to  some  extent  defeat  the  good  purpose  of  the  present' 
arrangement.    It  is  agreed  that  the  utmost  care  shall  be  taken 
by  both  governments  to  see  that  only  such  customs  regulations 
are  adopted  as  are  reasonably  necessary  for  the  protection  of 
the  treasury  against  fraud;  that  no  regulation   shall  be  made 
or  maintained  which  unreasonably  hampers  the  more  liberal 
exchange    of    commodities    now    proposed;    that    representa- 
tions  on   either  side  as  to  the  unfavorable   operation   of  any 
regulation  will  receive  from  the  other  all  due  consideration, 
with  the  earnest  purpose  of  removing  any  just  cause  of  com- 
plaint; and  that,  if  any  further  legislation  is  found  necessary 
to  enable  either  government  to  carry  out  the  purpose  of  this 
provision  such   legislation  will  be  sought  from   Congress  or 
Parliament  as  the  case  may  be. 

As  TO  FISHING  PRIVILEGES 

12.  The  government  of  Canada  agree  that,   until   other- 
wise   determined    by    them,    the    licenses    hitherto    issued    to 


RECIPROCITY  201 

United  States  fishing  vessels  under  the  provisions  of  Section 
3  of  Chapter  47  of  the  Revised  Statutes  of  Canada,  granting 
to  such  vessels  certain  privileges  on  the  Atlantic  coast  of 
Canada  shall  continue  to  be  issued  and  that  the  fee  to  be 
paid  to  the  government  of  Canada  for  such  license  by  the 
owner  or  commander  of  any  such  United  States  vessel  shall 
hereafter  be  one  dollar  per  annum. 

13.  It    is    understood   that   upon   a   day    and   hour   to   be 
agreed    upon    between    the    two    governments    the    President 
of  the  United  States  will  communicate  to  Congress  the  con- 
clusions now  reached  and  recommend  the  adoption  of  such 
legislation  as   may  be   necessary  on   the  part  of  the  United 
States  to  give  effect  to  the  proposed  arrangement. 

14.  It  is  understood  that  simultaneously  with  the  send- 
ing  of  such   communication  to   the  United  States    Congress 
by    the    President,   the   Canadian   government  will  communi- 
cate   to    the    Parliament    of    Canada    the     conclusions     now 
reached  and  will  thereupon  take  the  necessary  steps  to  pro- 
cure   such    legislation    as    is    required   to    give    effect   to    the 
proposed  arrangement. 

15.  Such  legislation  on  the  part  of  the  United  States  may 
contain    a    provision    that    it    shall    not    come    into    operation 
until    the   United   States    government    are    assured    that   cor- 
responding  legislation    lias    been    or    will    be    passed    by    the 
Parliament    of   Canada;    and    in    like    manner   the    legislation 
•  MI  the  part  of  Canada  may  contain  a  provision  that  it  shall 
not  come  into  operation  until  the  government  of  Canada  are 
a-sured    that    corresponding   legislation    has   been    passed    or 
will  be  passed  by  the  Congress  of  the  United  States. 

Yours  faithfully, 

W.   S.   Fielding, 
Wm.   Patterson. 
The  Honorable   P.  C.  Knox, 

Secretary  of  State,  Washington,  D.  C. 

Special  Stipulations  as  to  Pulp  Wood,  Pulp  and  Paper 

•  That    portion    of   the    letter    of    the    Canadian     ministers 
which  relates  to  pulp  wood,  pulp,  and  paper  is  as  follows: 


202  SELECTED  ARTICLES 

Pulp  of  wood  mechanically  ground;  pulp  of  wood,  chemi- 
cal bleached  or  unbleached;  news  print  paper,  and  other 
paper  and  paper  board,  manufactured  from  mechanical  wood 
pulp  or  of  which  such  pulp  is  the  component  material  of 
chief  value,  colored  in  the  pulp,  or  not  colored,  and  valued  at 
not  more  than  four  cents  per  pound,  not  including  printed  or 
decorated  wall  paper. 

Provided,  That  such  paper  and  board,  valued  at  four 
cents  per  pound  or  less,  and  wood  pulp,  being  the  products 
of  Canada,  when  imported  therefrom  directly  into  the 
United  States,  shall  be  admitted  free  of  duty,  on  the  condi- 
tion precedent  that  no  export  duty,  export  license  fee,  or 
other  export  charge  of  any  kind  whatsoever  (whether  in 
the  form  of  additional  charge  or  license  fee  or  otherwise)  or 
any  prohibition  or  restriction  in  any  way  of  the  exportation 
(whether  by  law,  order,  regulation,  contractual  relation,  or 
otherwise,  directly  or  indirectly)  shall  have  been  imposed 
upon  such  paper,  board,  or  wood  pulp,  or  the  wood  used  in 
the  manufacture  of  such  paper,  board  or  wood  pulp,  or  the 
wood  ptilp  used  in  the  manufacture  of  such  paper  or  board. 

Provided  also,  That  such  wood  pulp,  paper  or  board,  be- 
ing the  products  of  the  United  States  shall  only  be  admitted 
free  of  duty  into  Canada  from  the  United  States  when  such 
wood  pulp,  paper  or  board,  being  the  products  of  Canada  are 
admitted  from  all  parts  of  Canada  free  of  duty  into  the  Unit- 
ed States. 

Note — It  is  understood  that  fresh  fruits  to  be  admitted 
free  of  duty  into  the  United  States  from  Canada  do  not  in- 
clude lemons,  oranges,  limes,  grapefruit,  shaddocks,  pome- 
los, or  pineapples. 

It  is  also  understood  that  fish  oil,  whale  oil,  seal  oil  and 
fish  of  all  kinds,  being  the  product  of  fisheries  carried  on 
by  the  fishermen  of  the  United  States,  shall  be  admitted 
into  Canada  as  the  product  of  the  United  States,  and  similar- 
ly that  fish  oil,  whale  oil,  seal  oil  and  fish  of  all  kinds,  being 
the  product  of  fisheries  carried  on  by  the  fishermen  of  Can- 
ada, shall  be  admitted  into  the  United  States  as  the  product 
of  Canada. 


RECIPROCITY  203 

American  Economist.  47:  102.  February  24,  ign. 
Plain  Truth  About  the   Proposed   Reciprocity  Agreement. 

In  its  issue  of  February,  1911,  the  Canadian  Textile  Jour- 
nal presents  an  article  entitled  "Some  Aspects  of  the  Reci- 
procity Deal."  It  is  an  expression  from  the  Canadian  side 
which  might  well  claim  attention  on  the  American  side  of 
the  border.  At  the  very  outset  of  his  treatment  of  the  pro- 
posed bargain  between  the  United  States  and  Canada  the 
Canadian  editor  ^draws  attention  to  one  peculiar  fact  which 
has  escaped  attention  hitherto.  Referring  to  the  reciprocity 
treaty  of  1854,  he  remarks: 

Although  the  Canadian  commerce  affected  by  the  old  treaty 
was  practically  confined  to  lumber,  fish  and  farm  products,  and 
presented  a  comparatively  simple  proposition,  it  took  eight 
years  of  discussion  and  negotiations  before  that  treaty  was  con- 
cluded. Now  it  is  proposed  to  deal  with  a  vastly  more  complex 
range  of  industry  and  trade,  and  an  agreement,  framed  by  two 
gentlemen  on  each  side,  after  six  months  of  intermittent  study, 
revolutionizing  the  economics  of  a  hemisphere,  is  presented  to 
both  countries  in  the  form  of  an  ultimatum,  and  must  be  ac- 
cepted or  rejected  in  its  entirety. 

"Certainly  the  draft  of  the  proposed  agreement  of  to-day 
bears  on  its  face  evidence  of  a  most  deplorable  lack  of 
study,  investigation,  and  collection  of  facts  relating- to  eco- 
nomic conditions  on  both  sides  of  the  border  which  is  highly 
discreditable  to  the  negotiators  on  both  sides.  It  is  indeed 
remarkable  that  a  document  so  fraught  with  vital  conse- 
quences to  92,000,000  people  on  one  side  and  8,000,000  on 
the  other  side  should  have  been  rushed  to  a  conclusion  in 
so  short  a  space  as  six  months  of  superficial  figuring  and 
dickering.  The  result  is  what  might  have  been  expected, 
an  agreement  full  of  faults,  defects,  and  blunders.  The  Ca- 
nadian journal  wisely  observes: 

So  lung  as  each  country  maintains  its  own  tariff  it  will  be 
found,  as  before,  that  there  is  no  half-way  house  between  com- 
plete commercial  union  and  independent  fiscal  systems.  Unham- 
pered and  independent  action  by  both  countries  is  better  than 
Hi*-  tying  of  knots  which  would  only  have  to  be  undone  later  on, 
with  more  trouble  and  vexation  than  if  each  went  its  own  way 
as  a  friendly  neighbor. 

There  is  a  significance  in  this  remark  that  ought  not  to 
be  overlooked  in  view  of  the  excitement  and  alarm  caused 
by  annexation  talk.  Such  talk  was  inevitable  as  a  conse- 


204  SELECTED  ARTICLES 

quence  of  the  so-called  "reciprocity"  negotiations  and  their 
outcome.  President  Taft  set  the  pace  when  in  his  message 
to  Congress  and  in  his  subsequent  speeches  in  advocacy  of 
the  confirmation  of  the  agreement,  he  has  continually  laid 
much  stress  upon  the  "cementing  of  friendly  relations"  with 
our  Northern  neighbors.  We  already  had  the  most  amic- 
able relations.  No  two  countries  lying  side  by  side  in  the 
history  of  the  world  ever  had  more  complete  friendly  rela- 
tions than  Canada  and  the  United  States.  Then  why  talk  of 
more  friendly  relations?  No  wonder  the  Canadian  loyalists 
and  the  British  loyalists  took  alarm  at  a  trade  agreement 
whose  present  scope  and  ultimate  objects  were  so  openly 
declared  to  be  the  cultivation  of  "more  friendly  relations." 
This  was  diplomatic  language,  and  diplomatic  language,  ac- 
cording to  Talleyrand's  definition,  is  the  "art  of  concealing 
meaning  with  words/' 

Champ  Clark  in  his  hope  that  the  time  might  come  when 
the  American  flag  would  float  over  all  of  Great  Britain's 
dominions  on  the  American  continent,  was  only  a  little 
plainer  and  a  little  less  diplomatic,  for  he  meant  very  much 
the  same  thing  that  President  Taft  has  been  construed  as 
meaning.  Representative  Bennett,  of  New  York,  only  went 
a  little  farther  than  the  Democratic  leader  of  the  House 
when  he  introduced  a  bill  providing  for  the  creation  of  a 
commission  to  bring  about  the  annexation  of  Canada  to  the 
United  States.  Both  Clark  and  Bennett  were  following  the 
path  blazed  by  the  Presidential  ax,  only  they  were  clearing 
the  path  instead  of  merely  blazing  it. 

What  else  besides  ultimately  closer  political  ties  could 
President  Taft  have  meant  when  he  said: 

The  geographical  proximity,  the  close  relationship  of  blood, 
common  sympathy  and  identical  moral  and  social  Ideas  furnish 
very  real  and  substantial  reasons  why  this  agreement  ought  to 
be  viewed  from  a  high  plane. 

This  is  diplomatic  phraseology,  but  it  is  none  the  less 
significant  on  that  account.  Its  real  drift  and  tendency  have 
not  been  misunderstood  either  in  Great  Britain  or  by  the 
loyalists  of  Canada. 

The   Canadian  Textile  Journal  sees   some   significance   in 


RECIPROCITY  205 

the  fact  that  in  the  proposed  new  arrangement  the  article  of 
wool  does  not  appear  at  all.  This  would  seem  to  be  an  in- 
advertence. There  is  no  more  reason  why  Canadian  wool 
should  be  refused  free  entrance  to  our  market  than  why 
free-trade  should  be  established  in  a  large  and  much  more 
important  collection  of  articles  of  farm  products.  If  wheat, 
barley,  live  cattle  and  live  sheep,  why  not  wool?  It  is  true, 
as  President  Taft  remarks  in  his  message  to  Congress,  that 
Canada  "raises  comparatively  few  wool  sheep,  and  her  tex- 
tile manufactures  are  unimportant  as  compared  with  the 
equivalent  industries  in  the  United  States.  But  there  is  an 
explanation  of  this  fact  which  probably  did  not  occur  to 
President  Taft.  Canada  has  not  protected  her  wool  or  her 
woolens  as  effectively  as  the  United  States  has  done.  Un- 
der proper  protection  for  wool  and  with  no  preferential  tar- 
iff which  permits  British  textile  producers  to  undersell  the 
woollen  manufacturers  of  Canada,  the  conditions  named  by 
President  Taft  would  not  now  exist.  On  the  contrary,  Can- 
ada would  by  this  time  have  increased  her  flocks  by  many 
millions,  and  her  textile  weavers  would  be  furnishing  wool- 
len cloths  that  now  come  from  England  under  preferential 
tariff  reductions  in  favor  of  English  weavers. 

From  a  reading  of  the  article  in  the  Canadian  Textile 
Journal,  which  we  reprint  in  this  issue,  much  may  be  gath- 
rivd  that  has  a  bearing  on  the  question  of  the  wisdom,  the 
judgment,  and  economic  and  political  consequences  of  the 
proposed  tariff  agreement  with  Canada.  ^The  conclusion  is 
necessary  and  obvious  that  the  agreement  was  much  too 
hastily  and  imperfectly  considered,  and  that  it  is  so  full  of 
faults  and  flaws  and  mistakes  that  it  ought  to  be  rejected 
both  by  Canada  and  the  United  States.  So  far  as  the  United 
States  is  concerned  no  such  bargain  should  ever  be  permit- 
ted along  the  lines  followed  in  the  negotiations  with  Can- 
ada. If  we  are  to  alter  our  tariff  system  at  all,  it  should  be 
after  full  and  careful  consideration  by  the  proper  commit- 
tees of  the  American  Congress  and  by  the  final  judgment 
and  approval  of  the  American  Congress  itself. 


2o6  SELECTED  ARTICLES 

American  Economist.  47:  316.  May  26,  1911. 

Reciprocity  Not  Favored  by  the  Country  Generally. 

It  is  surprising  to  find  the  following  in  the  Camden  Post- 
Telegram,  which  is,  generally  speaking,  a  good  protectionist 
paper: 

Senator  Briggs  and  Martine  will  vote  for  Canadian  reciprocity 
when  the  bill  comes  up  in  the  upper  house  of  Congress.  If  Jer- 
sey interests  were  likely  to  be  harmed  by  this  measure  it  would 
hardly  get  the  support  of  these  representatives  of  opposing  po- 
litical parties.  The  prospects  are  that  New  Jersey  will  be  bene- 
fited by  the  opening  of  the  Canadian  market  to  its  garden  prod- 
uce and  some  of  its  manufactures,  and  by  the  free  entrance 
from  Canada  of  raw  materials  for  our  factories  and  of  lumber 
and  other  Canadian  products  in  general  use.  Senator  Briggs  has 
a  clearer  view  of  the  situation  than  the  two  New  Jersey  repre- 
sentatives in  the  lower  house  who  voted  against  the  administra- 
tion measure. 

We  say  this  is  surprising,  not  alone  because  the  Post- 
Telegram,  prior  to  the  development  of  President  Taft's  as- 
tonishing free-trade  project,  had  been  a  consistent  and  an 
intelligent  advocate  of  protection,  but  because  of  its  present 
short-sighted  view  that  New  Jersey  is  going  to  be  benefited. 
Suppose  that  New  Jersey  will  sell  some  "garden  sass"  to 
Canada,  will  sell  some  manufactures  to  Canada,  and  will 
get  some  raw  materials  from  Canada  cheaper  than  it  has 
heretofore  gotten  them  from  Americn  producers.  Will  all 
that,  assuming  it  to  be  true,  benefit  New  Jersey  in  the  long 
run?  No,  it  will  not.  First  of  all,  New  Jersey's  best  mar- 
ket both  for  her  garden  stuff  and  her  manufactures  is  the 
market  made  by  American  consumers.  No  small  part  of 
her  market  for  manufactures  is  made  by  Western  farmers. 
Now,  if  New  Jersey  buys  her  agricultural  raw  materials 
from  Canada  will  she  sell  as  much  as  heretofore  to  Ameri- 
can farmers?  Most  certainly  not.  She  will  lose  a  market 
at  home  far  more  valuable  than  the  Canadian  market  could 
possibly  be. 

But  there  is  something  else  to  be  considered.  If  the 
American  farmers  lose  any  portion  of  the  American  market, 
or  if  they  are  obliged  to  accept  lower  prices  for  their  prod- 
ucts, because  of  free-trade,  will  they  continue  to  vote  pro- 
tection for  New  Jersey's  manufacturers?  They  will  not.  It 


RECIPROCITY  207 

is  contrary  to  human  nature  that  they  should.  They  will 
smash  protection  when  they  discover  that  protection  is  not 
for  them.  Will  that  benefit  New  Jersey? 

Xow  it  is  possible  that  all  this  may  not  come  to  pass  as 
a  result  of  free-trade  in  farm  products.  We  think  it  will, 
inevitably.  Moreover,  we  think  it  ought  to  come  to  pass; 
that  if  protection  is  not  for  all  it  should  be  for  none.  But, 
in  any  event,  the  scheme  is  fraught  with  danger.  It  is  a 
hazardous  experiment  with  possible  consequences  of  incalcul- 
able disaster.  Then  why  try  such  an  experiment?  Why 
take  such  a  risk?  Why  not  stand  by  protection  in  the  fu- 
ture as  in  the  past?  There  is  in  that  no  experiment,  no  risk, 
but  there  is  sure  and  certain  prosperity  for  all.  Best  let 
well  enough  alone. 

American  Economist.  47:  323.  June  2,  1911. 

"Reciprocity"  Is   Losing  Ground.     Arthur  J.  Dodge. 
(Correspondence  American   Economist) 

Washington,  June  I. — There  have  been  indications  during 
the  past  few  days  that  President  Taft  is  becoming  seriously 
concerned  about  the  prospects  of  the  passage  through  the 
Senate  of  the  Canadian  agreement  bill.  Doubts  regarding 
the  safety  of  that  measure  in  the  Senate  have  been  growing 
(luring  the  past  two  weeks,  and  it  has  come  to  be  plain  that 
the  longer  the  measure  is  kept  in  suspense  the  weaker  it  be- 
comes, and  the  opposition  grows  confident  that  the  defeat 
of  the  measure  can  be  brought  about. 

What  appears  especially  to  trouble  President  Taft  is  the 
siiL^estion  of  possible  amendments  to  the  trade  agreement 
measure,  the  most  important  of  which  is  said  to  be  an 
amendment  proposed  by  Senator  Root,  of  New  York,  aimed 
to  bring  about  what  is  declared  is  not  now  the  case  under 
the  terms  of  the  bill,  namely,  actually  reciprocal  exchange 
of  wood  pulp  and  paper,  as  it  was  claimed  the  negotiators 
of  the  trade  agreement  measure  really  sought  to  accomplish. 
There  are  two  remarkable  things  about  the  present  situa- 


208  SELECTED  ARTICLES 

tion  as  to  the  trade  agreement  bill  in  addition  to  the  dimin- 
ishing interest  in  the  measure  and  the  indications  of  its  pos- 
sible failure.  One  of  these  is  the  insistent  demands  by  the 
supporters  of  the  measure  that  it  shall  be  brought  to  a 
speedy  vote,  and  the  other  is  the  opposition  to  even  such  a 
salutary  amendment  as  that  proposed  by  Senator  Root.  If 
the  Canadian  agreement  is  all  that  has  been  claimed  for  it 
by  President  Taft,  surely  the  bill  should  gain  in  strength 
rather  than  lose,  the  longer  the  matter  is  discussed  in  and 
out  of  Congress.  Inevitably  the  opinion  must  be  among 
the  people  of  the  country  that  a  measure  of  this  character 
that  will  not  stand  the  closest  scrutiny  and  the  fullest  pos- 
sible discussion  and  consideration  must  be  far  less  worthy 
than  President  Taft  and  other  supporters  of  the  bill  have 
sought  to  make  the  country  believe  it  is. 

'  Reason   for   Getting  Facts 

In  view  of  the  fact  that  no  industries  in  the  country  were 
taken  into  the  confidence  of  President  Taft  and  his  Admin- 
istration when  the  Canadian  trade  agreement  was  enacted, 
and  the  further  fact  that  no  hearings  of  consequence  were 
held  upon  it  during  the  consideration  and  passage  of  the  bill 
by  the  House  of  Representatives,  it  is  not  .surprising  that 
there  has  been  an  urgent  demand  by  representatives  of  in- 
dustries that  would  be  in  a  greater  or  less  degree  affected 
by  the  trade  agreement  to  be  heard  before  the  Finance  com- 
mittee of  the  Senate.  It  certainly  cannot  be  the  wish  of 
President  Taft  and  other  supporters  of  the  Canadian  agree- 
ment that  snap  judgment  shall  be  taken  upon  the  people  of 
the  country  and  the  bill  rushed  through,  either  here  or  in 
Canada,  without  the  people  of  both  countries  thoroughly 
understanding  what  is  intended  to  be  accomplished.  It  is 
hardly  sufficient  for  the  industries  of  this  country,  at  least, 
whose  representatives  have  a  genuine  fear  that  serious  dis- 
aster may  flow  from  the  operations  of  the  trade  agreement 
if  it  shall  become  a  law,  that  everybody  is  to  be  satisfied 
with  the  complacent  suggestion  of  President  Taft,  that  if 
the  agreement  does  not  work  satisfactorily  it  can  be  speedi- 
ly repealed!  There  ought  to  be  and  doubtless  is  a  way  for 


RECIPROCITY  209 

ascertaining  in  advance,  material  facts  with  respect  to  the 
probable  operations  of  the  trade  agreement,  and  that  is 
what  the  hearings  before  the  Finance  Committee  have 
sought  to  accomplish. 

It  is  difficult  to  explain  in  view  of  these  facts  why  there 
should  be  such  insistent  opposition  by  the  supporters  of  the 
Canadian  agreement  to  such  an  amendment  as  that  pro- 
posed by  Senator  Root,  of  New  York,  relating  to  the  paper 
and  pulp  sections  of  the  agreement.  It  must  be  that  Presi- 
dent Taft  and  his  friends,  in  urging  the  speedy  passage  of 
the  Canadian  agreement  bill,  are  coming  to  realize  the  fact 
that,  with  a  majority  of  the  Republicans  in  both  the  Senate 
and  the  House  opposed  to  this  measure,  it  becomes  rather 
embarassing  to  a  Republican  President  and  his  Administra- 
tion to  urge  upon  the  country  a  measure  that  is  thus  dis- 
credited by  a  majority  of  his  party  associates.  The  fact 
should  not  be  overlooked  that  not  only  are  a  majority  of  the 
Republicans  in  the  House  and  Senate  opposed  to  the  meas- 
ure, but  a  clear  majority  of  the  Committee  on  Finance,  in- 
cluding Republicans  and  Democrats,  are  known  to  be  op- 
posed to  a  favorable  report  upon  the  bill.  Indeed,  comment 
has  been  made  by  a  disinterested  writer,  in  a  communica- 
tion to  a  leading  paper  in  New  York,  which  is  supporting 
the  Canadian  trade  agreement,  that  the  number  of  actually 
loyal  supporters  of  the  Canadian  agreement  in  the  United 
States  Senate  could  ride  in  a  single  and  not  very  capacious 
automobile! 

The  Free-Pulp  and  Paper  Amendment 

Be  that  as  it  may,  it  is  the  strangest  thing  in  connection 
with  the  consideration  of  this  trade  agreement  that  only 
denunciation  and  protest  is  heard,  when  so  distinguished  a 
statesman  and  former  adviser  of  Presidents  at  the  Cabinet 
table,  Senator  Root,  proposes  that  a  change  shall  be  made  in 
the  Canadian  agreement  bill  whereby  there  shall  be  an 
actual  reciprocal  exchange  of  paper  and  pulp,  rather  than 
what  is  declared  to  be  a  "jug-handle"  arrangement  which 
would  result  only  in  paper  and  pulp  from  Canada  being  im- 
ported free  of  duty  into  the  United  States.  It  is  charged 


210  SELECTED  ARTICLES 

by  careful  students  of  the  trade  agreement  that  if  the  meas- 
ure were  passed  in  its  present  form  by  the  Congress  of  the 
United  States  and  approved  by  the  President,  Canada  might 
reject  the  entire  proposition  and  the  result  still  would  be 
that  paper  and  pulp  from  Canada  would  come  into  the  mar- 
kets of  the  United  States  free  of  duty.  Senator  Root  de- 
clares that  this  is  unfair.  He  believes  that  if  there  is  to  be 
a  free  admission  of  paper  and  pulp  into  the  United  States, 
every  consideration  of  fairness  with  respect  to  the  proposi- 
tion dictates  that  the  deal  shall  not  be  wholly  one-sided,  but 
be  precisely  what  President  Taft  and  his  friends  in  support- 
ing the  trade  agreement  have  declared,  namely,  an  actual 
reciprocal  exchange  of  all  commodities  touched  by  the  pro- 
visions of  the  trade  agreement  bill. 

The  opposition  to  the  Canadian  agreement  has  developed 
very  strongly  in  the  Finance  committee  during  the  past  ten 
days.  Farmers  and  manufacturers  of  paper  have  appeared 
here  from  many  of  the  border  states,  emphatically  declaring 
that  injurious  results  certainly  will  flow  from  the  pass-age  of 
the  bill  in  its  present  form.  The  fact  has  been  emphasized 
before  the  committee  by  farmers,  who  are  well  informed  re- 
garding trade  conditions  on  both  sides  of  the  boundary  line 
between  this  country  and  Canada,  that  there  would  be  a 
serious  depression  in  prices  of  American  farm  products 
without  any  appreciable  reduction  in  the  cost  of  living  of 
finished  commodities  made  from  these  raw  farm  products. 
The  explanation  for  this  is  that  the  actual  original  cost  of 
these  farm  products  constitutes  so  small  a  relative  propor- 
tion of  the  cost  of  the  finished  commodities  that  even  if 
manufacturers  were  able  to  obtain  the  farm  products  at 
reduced  prices,  as  a  result  of  free  Canadian  competition,  no 
appreciable  reduction  would  thereby  be  brought  about  in 
the  cost  of  the  finished  product  to  the  ultimate  consumer. 
This  is  an  important  feature  of  the  matter  which  should 
challenge  the  attention  of  thoughtful  people  throughout  the 
country,  regardless  of  the  merits  or  demerits  of  the  general 
so-called  "reciprocity"  proposition. 


RECIPROCITY  ^     211 

Farmers  and  Manufacturers  Object 

The  paper  manufacturers  are  equally  emphatic  in  declar- 
ing that  there  is  no  justice  in  the  proposition  that  their 
products  should  be  subjected  to  absolutely  free  competition 
from  the,  Canadian  side.  They  base  this  not  only  upon  their 
own  testimony  respecting  the  cost  of  producing  wood  pulp 
and  paper  in  this  country  and  in  Canada,  but  they  find  un- 
doubted support  for  their  contention  in  the  reports  made 
by  the  special  Congressional  committee  and  also  by  the 
Tariff  board.  Standing  squarely  upon  the  last  Republican 
platform,  which  demands  a  rate  of  duty  on  competing  prod- 
ucts at  least  equivalent  to  the  difference  in  the  cost  of  pro- 
duction in  this  country  and  in  foreign  countries,  they  very 
properly  ask  what  justification  there  is  in  demanding  that 
paper  and  pulp  be  denied  that  measure  of  protection  which 
the  Republican  platform  guarantees. 

With  the  prospect  that  the  Canadian  trade  agreement  bill 
will  be  reported  out  of  the  Finance  committee  within  a  few 
days,  probably  with  no  recommendation  as  to  action  by  the 
Senate,  the  committee  will  then  be  called  upon  to  give  some 
attention  to  the  remarkable  "Free  List"  bill  which  was 
passed  by  the  House  without  hearings  and  without  anything 
that  amounted  to  serious  consideration.  Intimations  are 
^•iven  that  the  committee  will  give  hearings  on  this  bill.  It 
may  easily  be  predicted  that  the  representatives  of  the  in- 
dustries in  the  country  that  are  threatened  with  disastrous 
competition,  as  a  result  of  the  free  listing  of  their  manufac- 
tured products,  even  while  retaining  duties  upon  the  mate- 
rials from  which  the  products  are  fabricated,  will  be  able  to 
demonstrate  to  the  committee,  to  the  Senate  and  to  the 
country  how  utterly  absurd  this  experimentation  in  Demo- 
cratic "Tariff  Reform"  really  is. 

Less  Than  Protection  is  Free-Trade 

In  the  meanwhile,  the  Democratic  majority  in  the  House 
is  moving  to  attack,  with  the  usual  Democratic  "blunder- 


212  SELECTED  ARTICLES 

buss"  methods,  the  wool  and  woollen  goods  and  cotton 
goods  schedules  of  the  Tariff.  Clinging  to  the  idea  that 
some  duties  must  be  retained  "for  revenue  only/'  the  Demo- 
crats give  evidence  of  turning  their  backs  upon  the  former 
free  wool  policy  of  their  party  to  adopt  a  proposition  which 
gives  neither  protection  nor  adequate  revenues.  The  fact 
seems  to  be  entirely  ignored  by  these  tariff-tinkers  that  less 
than  a  fair  protective  rate  of  duty  is  equivalent  to  absolute 
free-trade,  so  far  as  the  actual  results  in  demoralization  to 
labor  and  industry  in  this  country  are  concerned.  That  fact 
was  demonstrated  by  the  last  Democratic  tariff  law  that 
was  enacted,  and  it  will  be  demonstrated  by  the  present 
Democratic  tariff  bills  if  they  shall  ever  be  written  into  the 
statute  books. 


American  Economist.  47:  325.  June  2,  191 1. 

"Reciprocity"  Is  More  In  Doubt. 
(Correspondence  American  Economist) 

Washington,  June  i. — The  testimony  given  so  far  before 
the  Senate  Finance  committee  in  regard  to  the  proposed 
measure  of  reciprocity  with  Canada  shows  the  wisdom  of 
the  Democrats  in  control  of  the  House  committee  having 
charge  of  the  subject,  in  refusing  to  allow  any  hearing  on 
the  question.  Despite  the  efforts  of  Mr.  Norris  of  the 
American  Newspapers  Publishers'  Association,  and  others 
directly  interested  in  the  success  of  the  measure,  in  getting 
men  like  Prof.  Boyle,  of  Minnesota,  Gov.  Osborn,  of 
Michigan,  and  others  to  come  here  and  testify  in  behalf  of 
the  "reciprocity"  bill,  and  in  working  up  petitions  in  its 
behalf,  and  asking  .persons  to  send  telegrams  and  letters  to 
the  same  effect  to  Senators,  they  have  done. more  harm  than 
good. 

"Reciprocity"    Growing    Weaker 

The  measure  is  weaker  today  than  at  any  time  since  it 
was  first  introduced  in  Congress.  The  farmers  and  others 


RECIPROCITY  213 

have  given  the  strongest  kind  of  evidence  to  show  the  un- 
fairness of  the  measure,  and  the  enormous  injury  that  would 
result  from  its  passage,  while  Norris  and  others  have  been 
forced  to  admit  the  active  part  they  have  taken  in  trying  to 
force  the  measure  through  Congress.  Norris,  on  cross  ex- 
amination by  the  Senate  committee,  admitted  his  consulta- 
tions with  Mr.  Pepper,  the  State  Department  Tariff  "expert", 
who  was  sent  to  Ottawa  to  begin  negotiations,  and  his  (Nor- 
ris's)  work  in  pending  circulars  and  other  documents  over 
the  country  to  help  the  bill,  and  of  obtaining  men  to  testi- 
fy, etc. 

How  Some  Men  Came  to  Speak  for  the  Bill 

\Yhen  Prof.  Boyle  was  giving  his  testimony  he  admitted 
that  he  was  a  "Tariff  reformer,"  and  declined  to  say  whether 
or  not  he  had  been  promised  reimbursement  for*  his  ex- 
penses, etc.,  in  coming  to  Washington  to  testify  in  behalf  of 
this  legislation  to  help  develop  the  Canadian  Northwest. 
Gov.  Osborn,  of  Michigan,  was  almost  a  laughable  witness 
for  "reciprocity."  In  the  first  place  he  had  to  admit  that  he 
owned  a  newspaper  and  would  therefore  be  benefited  by 
getting  cheaper  paper  from  Canada.  But  he  declared  that 
"wheat  could  not  be  raised  in  Saskatchewan  in  competition 
with  our  wheat  fields,"  and  that  "the  arable  region  of  Can- 
,'ida  is  very  small,"  and  "the  great  Canadian  Northwest  can- 
not compete  with  Michigan  or  any  other  section  of  the 
United  States  where  wheat  is  raised." 

Foolish   Assertions 

In  view  of  the  large  and  rapid  increase  in  the  production 
of  wheat,  barley,  etc.,  in  the  Canadian  *  Northwest,  members 
o.f  the  committee  were  astonished  at  Gov.  Osborn's  asser- 
tions, and  they  found  him  equally  lacking  in  information 
about  the  provisions  of  the  "reciprocity"  bill.  Hence  Sena- 
tor Bailey  said:  "I  see  very  plainly  that  you  have  not 
troubled  yourself  with  the  details  of  this  treaty  at  all,"  to 
which  the  Governor  replied:  "No;  I  believe  that  Canada 
cannot  compete  with  us  in  anything."  Despite  the  record 


214  SELECTED  ARTICLES 

of  Canada's  exports  of  cereals  and  other  products  under  the 
reciprocity  treaty  that  was  abrogated  in  1866,  the  Governor 
stuck  to  his  assertions  on  this  point. 

Seeking  to  Develop  Plate  Glass  in  Canada 

Mr.  W.  J.  Strassburger,  secretary  and  treasurer  of  the 
Allegheny  Plate  Glass  Company,  pointed  out  to  the  com- 
mittee the  deceptive  feature  of  the  so-called  reciprocity  on 
plate  glass  in  the  agreement.  Canada  is  to  make  a  reduc- 
tion in  her  duty  on  plate  glass  of  2T/2  per  cent.,  which  Mr. 
Strassburger  showed  would  amount  to  eight-tenths  of  i 
cent  a  square  foot  on  glass  from  7  to  25  square  feet  per 
plate.  The  reduction  made  to  Canada  by  the  United  States 
would  be  14^2  cents,  against  Canada's  eight-tenths  of  I  cent. 
Mr.  Strassburger  said: 

We  would  not  have  any  market  for  plate  glass  except  for 
the  tariff.  We  organized  under  the  tariff  and  cannot  exist  with- 
out it.  We  pay  $2.25  a  day  wages,  while  Belgium  pays  65  cents, 
and  other  European  countries  in  proportion.  England  has  a 
preferential  rate  into  Canada  of  7y2  per  cent,  ad  valorem.  France 
has  intermediate  rates,  but  Belgium,  paying  higher  rates,  ships 
four  times  as  much  of  this  glass  to  Canada  as  does  France. 
Great  Britain  supplies  62  per  cent,  of  the  glass  Canada  uses.  We 
could  not  ship  any  more  there  if  we  had  free  entry.  We  could  not 
get  men  to  work  in  this  country  for  the  European  rate  of  wages. 
Under  the  tariff  we  have  reduced  the  prices  of  glass  from  $1.75 
to  30  odd  cents,  because  of  improvements  in  production.  But 
even  then  we  cannot  keep  out  imports  of  such  glass.  The  pro- 
posed arrangement  with  Canada,  which  produces  no  glass  now, 
would  simply  enable  Canada  to  build  factories  to  supply  this 
country  with  plate  glass,  but  would  not  foster  American  industry 
one  particle.  It  is  deception  so  far  as  it  pretends  to  benefit  the 
American  manufacturer  and  his  workmen. 


American  Economist.  47:  368.  June  23,  191 1. 

Both    Sectional    and    Partisan.      Mulhall    (Okla.)    Enterprise. 

The  understanding  we  have  always  had  of  the  word  ''reci- 
procity," namely,  a  mutual  exchange,  it  seems  to  us  is  not 
carried  out  by  this  treaty.  How  is  it  figured  that  a  90,000,000 
is  a  fair  exchange  for  a  9,000,000  market. 

On  a  par  with  the  unfairness  of  this  exchange  of  goods 
between  the  United  States  and  Canada,  is  the  partisan  man- 


RECIPROCITY  215 

ner  in  which  the  Democrats  are  proposing  to  revise  the 
tariffs  on  farm  products.  The  tariff  on  food  animals  between 
Canada  and  the  United  States  is  taken  off.  The  Canadian 
sheep  owner  may  drive  his  flock  across  the  border  and  shear 
them  and  sell  the  wool  in  the  American  market  and  then 
drive  his  flock  back  to  Canada. 

\Yliy  not  let  Mexican  sheep  and  wool  come  in  the  same 
way?  Because  Texas  is  a  Democratic  state.  For  the  same 
reason  Mexican  cattle  cannot  be  driven  into  Texas,  but 
Canadian  cattle  may  be  driven  into  Republican  states  on  the 
border  without  paying  the  tariff.  The  wheat,  oats,  barley, 
and  rye  of  the  Northern  farmer  must  come  into  competition 
with  the  Canadian  farmer,  tariff  free;  but  the  tobacco,  sugar 
and  rice  of  the  southern  states  are  not  to  be  on  the  free 
list.  Is  the  method  of  making  a  tariff  sectional?  Is  it  parti- 
san? By  such  methods  the  Democratic  party  again  shows 
its  capacity  for  blundering,  and  no  doubt  they  are  consoled 
by  the  fact  that  they  have  a  good  sized  bunch  of  Republican 
"Progressives"  to  keep  them  company. 

It  will  only  require  a  year's  trial  of  such  an  unfair,  un- 
patriotic partisan  measure  to  arouse  the  farmer  voters  to 
its  unequal  application,  and  then  they  will  snow  the  party 
under  with  tlu-ir  ballots,  that  is  responsible  for  such  legis- 
lation. Not  the  least  joyful  result  of  the  storm  of  ballots 
will  be  to  see  four  or  five  dozen  Progressive  Republicans 
in  it,  up  to  their  knees,  having  taken  a  header  for  private 
life. 

Journal  of  Political  Economy.  19:  567-73.  July,  1911. 

Proposed   Agreement   as   Viewed   by   the    Farmer. 

G.  C.  White. 

Few  questions  of  great  importance  have  been  so  unfairly 
presented  to  the  reading  public  as  the  one  now  under  dis- 
cussion. For  this  reason  the  efforts  of  this  Economic  So- 
ciety to  bring  together  the  representatives  of  the  many 
classes  interested  at  this  forum  for  full  and  free  discussion 


216  SELECTED  ARTICLES 

of  this  subject  must  receive  the  approval  and  praise  of  all 
who  believe  that-  right  and  justice  should  prevail. 

For  some  reason  most  of  the  magazines  of  our  country 
and  the  great  newspapers  of  our  cities  have  refrained  from 
publishing  articles  other  than  those  favorable  to  this  agree- 
ment. This  is  partly  due  to  the  false  idea,  which  is  general, 
that  the  farmers  are  making  excessive  profits  and  that  they 
could  well  afford  to  sell  their  products  for  lower  prices 
than  have  prevailed  during  the  past  five  years.  The  Census 
of  1900  shows  the  average  income  of  the  Iowa  farmer  to 
be  $1,600  while  his  investment  is  over  $10,000.  After  de- 
ducting interest  on  his  investment,  taxes,  hired  help,  making 
allowance  for  depreciation,  etc.,  the  farmer  has  left  as  wages 
for  himself  and  family  less  than  $600.  The  wife  helps  with 
the  work  of  the  farm,  often  husking  a  part  of  the  corn;  the 
children  help  with  the  farm  work  from  the  time  they  are 
eight  years  old,  and  seldom  attend  school  except  in  the 
winter  season  after  they  are  twelve  years  old.  No  one  will 
dare  say  $600  is  excessive  wages  for  the  farmer  and  his 
family  for  their  year's  work.  The  Census  also  shows  that 
the  income  and  wage  of  the  farmer  in  Iowa  is  greater  than 
in  any  other  state.  The  average  gross  income  of  the  Illi- 
nois farmer  in  1900  was  about  $1,400.  Some  will  say  that 
prices  were  much  higher  in  1910.  The  Census  reports  are 
not  complete  for  1910,  but  taking  such  reports  as  are  avail- 
able from  the  Census  and  the  reports  of  the  secretary  of 
the  State  Board  of  Agriculture  of  Iowa,  I  find  the  average 
income  of  the  Iowa  farmer  for  the  year  1900  to  be  $2/100, 
and  this  includes  poultry,  eggs,  and  dairy  products.  His 
investment  has  nearly  doubled;  wages  are  about  40  per  cent 
higher,  and  after  making  the  necessary  deductions  his  net 
income,  or,  rather  the  wage  received  by  himself  and  family, 
is  less  than  $800  per  year. 

There  are  three  points  in  this  discussion  to  which  I 
would  call  your  attention:  (i)  What  is  the  agreement? 
(2)  Who  are  asking  for  it?  (3)  What  are  the  probable  re- 
sults? 

From   the   farmer's   viewpoint   the  word   "reciprocity"   as 


RECIPROCITY  217 

here  used  is  a  misnomer;  there  is  nothing  reciprocal  or 
mutual  about  it.  The  chief  purpose  of  this  agreement  is 
to  reduce  the  price  of  farm  products.  Thes.e  are  the  only 
products  admitted  duty-free  through  this  agreement  except 
fish  and  rough  lumber.  All  manufactured  products  will  con- 
tinue to  pay  duties  ranging  from  20  per  cent  upward. 

The  following  articles  by  the  terms  of  the  agreement  are 
duty  free  when  moved  from  one  to  the  other  country:  live 
animals,  poultry,  eggs,  dairy  products,  fruits,  honey,  fish, 
rough  lumber,  and  grain  including  corn,  wheat,  oats,  barley, 
etc.  So  far  as  I  can  learn  this  includes  nearly  every  product 
of  the  farm. 

While  wheat  is  on  the  free  list  the  duty  is  still  main- 
tained on  flour;  while  cattle  and  hogs  are  admitted  free  the 
duty  is  still  maintained  on  dressed  meat.  This  is  done 
supposedly  for  the  benefit  of  the  miller  and  packer.  It" 
the  purpose  of  this  agreement  is  to  reduce  the  cost  <>!"  liv- 
ing, why  not  admit  flour  and  dressed  meat  duty  free?  The 
consumer  buys  flour  not  wheat;  meat  not  live  cuttle.  Mill- 
ing is  largely  a  monopoly  and  the  large  mills  fix  the  margin 
for  milling.  The  packers  are  now  under  indictment  for 
illegal  acts  in  combining  to  depress  the  price  of  live  animals 
and  to  exact  excessive  prices  for  their  product.  It  is  hard 
to  understand  why  the  miller  and  packer  need  protection 
more  than  the  farmer. 

The  President  in  his  message  of  April  5,  191 1,  presents 
the  issue  squarely  in  these  words:  "We  have  s<>  increased 
in  population  and  in  our  consumption  of  food  products  and 
the  other  necessities  of  life,  hitherto  supplied  largely  from 
our  own  country,  that  unless  we  materially  increase  our 
production  we  can  see  before  us  a  change  in  our  economic 
position,  from  that  of  a  country  selling  to  the  world  food 
and  natural  products  of  the  farm  and  forest,  to  one  con- 
suming and  importing  them." 

Mr.  James  J.  Hill,  through  his  public  utterances  and  maga- 
zine articles,  has  warned  the  people  of  this  country  that  we 
were  about  to  reach  the  point  where  we  would  not  produce 
enough  food  to  feed  our  population.  The  argument  is  freely 


218  SELECTED  ARTICLES 

offered  that  the  farmer  has  received  no  direct  benefit  from 
the  tariff.  While  this  is  true  he  has  been  promised  that 
eventually  he  would  receive  a  direct  benefit.  The  lamented 
William  McKinley  made  a  tour  of  the  West  in  October, 
1894,  to  aid  the  Republican  congressional  ticket.  His 
speeches  were  an  appeal  to  the  patriotism  of  the  farmer 
and  urged  him  to  vote  for  the  protective  tariff  in  order 
that  the  manufacturer  might  pay  better  wages  to  his  men; 
and  that  the  farmer  would  be  rewarded  by  a  home  market 
for  his  products  at  greatly  enhanced  prices.  This  has  been 
the  argument  of  all  who  attempt  to  justify  a  protective  tariff 
to  the  farmers  of  this  country.  It  is  in  the  nature  of  a  con- 
tract that  has  existed  for  years  between  the  consumers 
and  the  farmers.  Now  that  the  home  market  is  about  to 
be  realized,  free  food  from  Canada  is  demanded  and  this 
in  spite  of  the  fact  that  food  is  shown,  by  the  report  of  the 
Lodge  Senate  committee,  to  be  much  cheaper  here  than  in 
European  countries. 

The  principal  advocates  of  this  co-called  reciprocity  are 
the  following:  The  East  and  manufacturing  districts  by 
this  means  hope  to  get  cheaper  food;  the  large  cities  and 
especially  those  near  the  Great  Lakes  believe  it  will  extend 
their  trade  with  Canada;  the  railroads  hope  to  haul  the 
wheat  from  Canada  to  the  United  States  and  to  return  more 
manufactured  articles  from  the  states  than  are  now  shipped. 
The  speculators  who  have  invested  in  Canada  lands  believe 
it  will  largely  increase  the  value  of  their  holdings.  Many 
others  hope  that  through  this  agreement  the  farmer  will  be 
convinced  that  he  shares  none  of  the  benfits  of  the  protec- 
tive tariff,  but  is  required  to  pay  excessive  prices  for  what 
he  buys;  and  after  its  passage  he  will  be  easily  induced  to 
vote  for  the  destruction  of  the  protective  principle.  The 
greater  part  of  the  advocates  of  reciprocity  in  the  agricul- 
tural states  belong  to  this  latter  class.  Some  prominent 
newspapers  advocate  the  adoption  of  this  agreement  hoping 
it  will  utterly  destroy  the  protective  tariff. 

That  there  is  a  general  demand  for  cheaper  food  on  the 
part  of  the  consumer  is  not  disputed,  but  the  question  to  be 


RECIPROCITY  219 

met  here  is:  Would  it  not  be  far  better  to  reduce  from  the 
other  end  of  the  line  than  by  depressing  the  price  on  the 
article  as  it  leaves  the  farmer?  Recent  investigations  of  the 
Secretary  of  Agriculture  show  that  on  an  average  the  farmer 
gets  only  50  per  cent  of  what  the  consumer  pays  for  the 
product.  If  the  farmer's  price  is  materially  reduced  he  will 
curtail  production  because  lower  prices  will  not  justify  the 
employment  of  labor  at  present  high  rates,  and  still  larger 
numbers  of  farmers'  boys  will  be  compelled  to  engage  in 
commercial  and  professional  occupations  and  the  rural  popu- 
lation will  continue  to  decline. 

The  chief  reason  for  the  decline  in  the  rural  population 
(luring  the  past  ten  years  is  the  fact  that  the  wages  or  prof-, 
its  of  the  farmer  are  less  than  those  in  other  lines  of  busi- 
ness. 

Those  who  read  the  market  pages  of  our  great  newspa- 
pers will  not  deny  that  the  prospect  of  reciprocity  has  re- 
duced the  prices  of  grain.  The  following  from  the  Chicago 
Tribune  market  notes.  May  j6,  helps  to  explain  the  marked 
decline  in  prices  of  farm  products  in  recent  months:  ''Wheat 
in  this  country  from  a  supply  and  demand  standpoint  is 
legitimately  worth  $i.  Canadian  reciprocity  talk  knocked 
from  ten  to  fifteen  cents  off  the  price."  Now  if  talk  alone 
will  have  this  effect  what  will  free  interchange  amount  to 
ten  years  hence? 

It  is  not  what  Canada  produces  today  that  we  need  fear 
but  the  products  of  future  years  when  the  vast  areas  are 
under  cultivation.  Not  many  years  ago  the  Dakotas  grew 
no  wheat.  The  possibilities  of  wheat  production  in  Canada 
are  immense'.  It  is  said  that  less  than  10  per  cent  of  any  of 
the  Northwest  territorie-  is  cultivated.  These  four  terri- 
tories have  an  area  of  over  400,000  square  miles;  they  art' 
gently  rolling,  mostly  prairie,  with  a  virgin  soil,  fully  as 
productive  as  the  Dakotas,  and  an  area  eight  times  as  great 
as  the  state  of  Illinois. 

The   argument   is   advanced    that   free   importation    of    Qa 
nadian   wheat   will   not    reduce  the   price    of  corn;   this    is    a 
mistake;   nearly  all   of  our  wheat-growing  land  will  produce 


220  SELECTED  ARTICLES 

corn  equally  as  well;  if  the  price  of  wheat  is  materially  re- 
duced the  Kansas  farmer  as  well  as  the  Minnesota  farmer 
will  grow  corn  in  place  of  wheat,  and  the  price  of  corn  will 
decline  because  of  excessive  production.  It  is  also  claimed 
that  because  Canada  does  not  grow  corn  it  will  not  compete 
with  us  in  meat-production;  but  Ireland  and  Denmark  are 
famous  for  their  pork  and  send  large  quantities  to  England, 
yet  they  grow  no  corn.  Canada  will  produce  pork  with  oats 
and  peas  and  better  than  our  own.  It  is  true  that  Canada 
is  taking  large  numbers  of  our  horses;  the  demand  would 
not  be  greatly  increased  because  of  this  agreement,  for  every 
immigrant  may  take  ten  head,  duty  free,  into  Canada  at  the 
present  time.  The  inevitable  result  that  is  to  follow  the 
settling  of  Canada  with  its  cheap  land,  producing  an  abun- 
dance of  hay  and  oats,  will  be  to  make  Canada  a  large  ex- 
porter of  horses  within  ten  years. 

Some  persons  urge  this  agreement  because  Canada  is  a 
near  neighbor  whose  people  speak  a  common  language  and 
have  common  motives  and  by  this  means  they  hope  to  pro- 
mote closer  relations.  If  this  is  the  purpose  why  not  have 
free  interchange  of  all  commodities;  why  limit  it  to  farm 
products?  This  same  argument  will  apply  with  equal  force 
to  England;  the  means  of  communication  are  such  that  Eng- 
land is  closer  to  a  large  part  of  the  United  States  than 
Canada. 

There  are  no  advantages  offered  to  the  farmers  through 
this  agreement,  should  it  be  adopted  they  will  be  compelled 
to  continue  to  sell  in  the  lowest  market  in  the  world  and 
buy  in  a  market  greatly  consume  about  40  per  cent  of  the 
manufactures  sold.  The  decline  of  prices  of  farm  products 
will  compel  the  farmer  to  curtail  his  purchases.  These  prod- 
ucts are  over  30  per  cent  lower  today  than  the  average 
price  during  the  three  preceding  years.  The  products  of 
the  farms  of  Iowa  for  these  years  were  worth  nearly  $500,- 
000,000  annually.  The  farmers  of  Iowa  will  have  about 
$150,000,000  less  to  spend  this  year  than  last.  If  the  mer- 
chants of  Iowa  are  wise  they  will  not  purchase  over  60  per 
cent  of  the  amount  they  purchased  last  year;  the  same  is 


RECIPROCITY  221 

true  of  other  agricultural  states.  Thus  the  decline  in  price 
is  sure  to  react  upon  the  manufacturer  and  laborer.  It  will 
be  seen  that  no  class  can  escape  the  injury  that  is  bound  to 
follow  an  attack  on  the  prosperity  of  another  class.  In  this 
question  there  is  a  direct  conflict  of  interest  between  the 
agricultural  classes  and  the  manufacturing  interests. 

If  the  manufacturers  have  reached  such  a  condition  that 
they  must  invade  the  world's  markets  and  must  have  cheaper 
food  and  cheaper  labor,  as  was  the  case  in  England  sixty 
years  ago,  they  ought  to  be  fair  and  say,  We  are  willing 
to  abandon  our  fictitious  basis  of  values  and  will  surrender 
our  advantages  under  the  protective  tariff  in  order  that  we 
may  get  cheaper  food  and  cheaper  labor. 

If  the  manufacturer  is  to  receive  the  benefit  of  a  protec- 
tive tariff  on  his  product  ranging  from  50  to  100  per  cent  it 
is  entirely  unjust  to  say  that  the  tariff  shall  be  removed 
from  the  products  of  the  farm,  for  this  is  the  effect  of  this 
agreement,  and  that  the  farmer  shall  be  compelled  to  sell  in 
a  free-trade  market  and  buy  in  a  highly  protected  one, 
while  on  the  other  hand  the  Canadian  may  sell  in  our  mar- 
ket if  to  his  advantage  and  buy  from  Europe  or  Japan  as 
lie  chooses. 

So  long  as  we  maintain  a  protective  tariff  it  is  manifestly 
unjust  to  say  that  the  agricultural  classes,  over  35  per  cent 
qf  our  population,  shall  receive  no  benefits  from  this  policy; 
that  the  reward  of  their  labor  shall  be  taken  from  them 
through  an  unjust  tariff  law  and  given  to  the  more  favored 
classes  who  enjoy  protection. 

If  the  measure  of  protection  is  to  be  the  difference  be- 
tween the  cost  of  production  at  home  and  abroad  with  a 
reasonable  profit  added,  why  not  apply  this  principle  to 
food  products.  This  principle  applied  to  Canada,  because  of 
cheaper  land  and  a  virgin  soil,  would  give  us  a  protective 
tariff  on  food  products  of  fully  25  per  cent. 

The  farmer  in  the  production  of  grain  or  meat  combines 
capital,  skill,  and  labor,  just  as  the  man  who  manufactures 
steel,  rails,  cloth,  or  shoes,  and  is  justly  entitled  to  the 
same  measure  of  protection. 


222  SELECTED  ARTICLES 

We  have  just  reached  the  point  where  the  tariff  will 
enhance  the  prices  for  farm  products.  The  farmer  is  not 
getting  as  good  pay  for  his  labor  as  other  classes.  He  does 
not  create  fictitious  prices  for  his  products  through  monopo- 
lies. It  would  be  far  better  to  produce  our  food  at  home 
and  have  our  own  farmers  prosperous  consumers,  than  to 
pay  our  money  to  the  Canadian  farmer  for  his  product  with 
no  assurance  that  he  will,  spend  any  part  of  such  money 
for  American  goods. 

Our  own  farms  will  easily  produce  50  per  cent  more  food 
products  than  they  are  now  producing  if  the  consumer  is 
willing  to  pay  a  reasonable  price  for  them  so  that  the  farm- 
er may  expend  a  greater  amount  for  labor. 

The  consumers  should  be  patriotic  enough  to  demand 
food  grown  by  our  own  farmers;  reduce  the  excessive  toil 
taken  by  the  middlemen  and  increase  the  wealth  and  pros- 
perity of  our  own  states  rather  than  lending  their  energies 
to  develop  northwest  Canada. 


AN    INITIAL 

.  BE  ASSESSED   FOR    r 
BOOK  ON   THE  DATE  D, t       "  T° 
INCREASE  TO  So  CLTQ          ™E  PENALTY 

AND   TO   *,.oo   ON   TH  °N  ™E  FOURTH 

OVERDUE.  rHE  SEVENTH  DAY 


DEC  30IS32 


JUN    101938 


MAR  26 


10Jan'57Cfif 

REC'D  LD 

DEC  1 9  1956 


0608 1 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


